Public Procurement Prices of Medicines in the Philippines

Public Procurement Prices

of Medicines in

the Philippines

Douglas Ball and Klara Tisocki

i

Acknowledgements

This successful completion of the study presented in this report is the result of the efforts of a

combination of people.

We would like to express our profound gratitude to those in the hospitals, pharmacies, Botika ng

Barangays, distributors, manufacturers and other sources of information who gave so freely of their

time to allow us to collect data from their facilities and companies. They are not named for reasons of

confidentiality but we acknowledge that this work would not have been possible without them.

The Department of Health (DOH) of the Republic of the Philippines through the Bureau of

International Health and the Pharmaceutical Management Unit provided strong support to allow the

team to access public health facilities and proved to be an invaluable source of background and policy

information which allow the results to be seen and interpreted in their proper context. In particular, we

would like to acknowledge the support of:

Atty. Alexander A. Padilla, Undersecretary of Health for Health Regulations, DOH

Director Maylene M. Beltran, Bureau of International Health, DOH

Dr. Robert Louie P. So, Program Manager, Pharmaceutical Management Unit, DOH

Dr. Dennis Quiambao, Assistant Manager, Pharmaceutical Management Unit, DOH

The study was wholly funded by Health Action International Global office for which the investigators

express their gratitude. Ms. Margaret Ewen in particular provided the impetus for the study and

provided encouragement and support which ensured the successful completion of the project.

Dr. Klara Tisocki was one of the original minds behind conducting the surveys and provided

invaluable technical and administrative assistance and support on a voluntary basis. Although she is

one of the authors of this report, it is important that her wider contribution is acknowledged.

Similarly, Ms. Aiza Morales-Buncag as research assistant was instrumental to the completion of this

project through provision of outstanding administrative support through coordinating visits to research

sites as well as participating in data collection. Her tireless efforts are recognised and appreciated.

The assistance of Ms. Normita Leyesa of the Philippine Pharmaceutical Association in helping to

identify pharmacies willing to participate in the price components survey is warmly acknowledged.

Funding

The study was wholly funded by Health Action International Global (www.haiweb.org)

Conflicts of Interest Statement

None of the authors are aware of any conflicts of interest. DB is an independent pharmaceutical

consultant working in public health and development. KT is a pharmaceutical consultant currently

employed in the European Union Mission to the Department of Health, Philippines. DB and KT are

members of HAI Europe and have performed consultancies for HAI Global and other international

NGOs in the past.

iii

Executive summary

Background

There are long-standing concerns that the prices of medicines in the Philippines are high relative to

other countries in the region and of similar economic status. A study was commissioned to assess the

efficiency of public procurement at various levels of the health system in the Philippines. The

methodology used was that developed by the World Health Organization and Health Action

International and data was collected during the period of December 2008 through to February 2009.

Methodology

The procurement prices of originator brand and lowest priced generic equivalents of a basket of 50

medicines were obtained from DOH-retained, provincial and municipal hospitals in six different

regions of the Philippines (a total of five DOH-retained, six provincial and five municipal hospitals

participated). In addition, data were collected from the provincial pharmacy in Region IV-B (Botika

ng Lalawigan of Oriental Mindoro; BLOM), a large non-DOH hospital in Metro Manila and the

pharmaceutical subsidiary of the Philippines International Trading Corporation (PITC). The unit prices

obtained were converted to a median price ratio by dividing by the unit price from an internationally

recognised price listing based on actual prices available in the international market from mostly not-

for-profit suppliers. The median price ratio (MPR) indicates how much more or less the local unit

price is relative to the international reference price e.g. an MPR of 2 means the local price is twice the

reference price.

Findings

National procurement efficiency: Overall, public procurement operations at DOH-retained,

provincial and municipal hospitals procure generic medicines at 2.9 times the international reference

price. When originator brands are procured, they are on average at 15.7 times international reference

prices. Using matched pair data indicated a brand premium of around 5.7 meaning that procuring a

brand would on average cost 5.7 times more than procuring the equivalent generic medicine.

Procurement efficiency at different levels: DOH-retained hospitals were generally more

efficient at procuring medicines (as judged by price) than provincial hospitals, and provincial hospitals

were more efficient than municipal hospitals (summary MPRs for generic medicines 2.2, 3.2 and 3.9

respectively). Corresponding MPRs for procurement of generics by the non-DOH hospital and BLOM

were 4.4 and 1.9 respectively.

Procurement prices of individual medicines: It was possible to procure generic essential

medicines at prices comparable to those available on international markets with the lowest MPR

observed being 0.3 (gliclazide tablets and cefuroxime injection). However, most procurement entities

were procuring medicines at levels much higher than the reference prices. Excluding PITC Pharma,

across all facilities insulin (generic and originator brand) was being procured at close to the

international prices, while generic medicines such as doxycycline, diazepam and fluoxetine were being

procured on average at 13 – 40 times international prices.

iv

Variability in procurement efficiency and procurement prices: There was extreme

variability in the efficiency of the public procurement of essential medicines in the Philippines such

that people living in different regions (or even different provinces or municipalities within the same

region) of the Philippines do not have the same access to essential medicines in terms of affordability.

For example, procurement prices for generic amoxicillin 500mg capsules varied from 1.5 to 10.9

Pesos/capsule (P/capsule) (excluding PITC Pharma). The greatest variability was seen with generic

ciprofloxacin and doxycycline where the highest procurement price was more than 40 times the lowest

observed.

There were also cases of extreme variability in the efficiency of public procurement of the same item

within the same hospital from one procurement cycle to the next (even within the same year). Some of

these cases related to procurement of ‘branded-generic’ versions compared to low-priced generic

versions, but other cases were variations between the same or different low-priced generic products.

For example, in one hospital, the unit cost of generic ciprofloxacin 500mg tablets varied from P 7.9 to

P 1.6 while that for amoxicillin 500mg capsules changed from P 4.5 to P 2.3. The variations were

unrelated to procurement volume.

Implementation of procurement regulations: In spite of acts and regulations on procurement,

the interpretation and implementation of these pieces of legislation can vary between procurement

entities. For example, there were cases of negotiations with suppliers taking place after bidding

processes had been completed, consignment contracts being preferentially offered to non-winning

bidders and being used to procure ‘branded-generics’, unnecessary originator brands being procured to

meet perceived needs of patients. Of more concern, however, were credible stories of corruption in

bidding.

PITC Pharma procurement: PITC Pharma was able to procure low-priced generic essential

medicines using its current structures, procuring generics on average at levels similar to the

international reference prices (median MPR 1.0). PITC Pharma parallel imported originator brands are

cheaper than locally available originator brand products and, in some cases cheaper than publicly

procured generic equivalents. However, PITC was able to procure generic captopril at prices lower

than that for the parallel imported originator brand (unit costs P 2.4 and P 6.7 respectively).

Revolving funds: Health facilities operating revolving funds to support procurement of medicines

appeared to increase availability of medicines but they procured more high cost originator brands and

also tended to have higher prices for generic medicines thus leading to higher costs for patients.

Recommendations

There needs to be improved transparency and governance in public procurement

practices through use of transparent procurement mechanisms e.g. PhilGEPS, public accessibility of

bid awards and prices, reliable monitoring and publication of public procurement prices, random

audits of procurement practices, and capacity building in pharmaceutical procurement in local

government units (LGUs). In addition, further study of the factors leading to the variation in

procurement prices observed in this study would be beneficial.

Medicine financing in the public health sector needs to be strengthened in order to improve

the availability of medicines in public health facilities. LGUs need to be more accountable in their

v

allocation and use of resources for healthcare, including provision of essential medicines.

Furthermore, PhilHealth should develop relevant benefit packages that include the provision of

outpatient medicines.

More efficient methods of medicines procurement need to be investigated. PITC Pharma

should concentrate on procuring quality generic medicines for the public sector while municipal

authorities should explore mechanisms to participate in pooled procurement at a regional or provincial

level. Further investigation of the operation of revolving funds for the procurement of medicines and

how they impact on availability and patient prices is required.

Issues of the quality and interchangeability of generic medicines needs to be effectively

addressed by the Bureau of Food and Drugs (BFAD) especially through rigorous application of

current Good Manufacturing Practice standards, setting standards and publishing information on the

interchangeability of products, and enhancing post-marketing surveillance systems to monitor the

quality of medicines in the marketplace.

vi

List of Abbreviations and Acronyms

AO Administrative Order BFAD Bureau of Food and Drugs BHS Barangay Health Station BLOM Botika ng Lalawigan of Oriental Mindoro; see also BnL BnB Botika ng Barangay BnL Botika ng Lalawigan; see also BLOM CALABARZON Cavite, Laguna, Batangas, Rizal and Quezon Provinces cGMP current Good Manufacturing Practice; see also GMP CHD Center for Health Development COA Commission on Audit COBAC Central Office Bids and Awards Committee CPR Certificate of Product Registration DEEM Differential Expenditure Efficiency Measurement DOH Department of Health EDPMS Essential Medicines Drug Price Monitoring System EO Executive Order EML Essential medicines list G Generic GDP Gross domestic product GMP Good Manufacturing Practice; see also cGMP GPR Government Procurement Reform GSO General Services Office GST Goods and Services Tax HAI Health Action International HIV Human Immunodeficiency Virus ILHZ Inter Local Health Zone IQR Interquartile range (range between 1st and 3rd quartile) LGU Local Government Unit MeTA Medicines Transparency Alliance MIMAROPA Oriental Mindoro, Occidental Mindoro, Romblon and Palawan

Provinces MPR Medicine price ratio MSH Management Sciences for Health NCR National Capital Region NGO Non-governmental organization NMP National Medicines Policy NSO National Statistics Office OB Originator brand OECD Organization for Economic Co-operation and Development PHAP Pharmaceutical & Healthcare Association of the Philippines PhilGEPS Philippines Government Electronic Procurement System PhilHealth Philippines Health Insurance Corporation; see also PHIC PHIC Philippines Health Insurance Corporation; see also PhilHealth PITC Philippines International Trading Corporation PMU50 Pharmaceutical Management Unit-50 PNDF Philippines National Drug Formulary PO Purchase Order PPP Purchasing Power Parity PWI Procurement Watch Inc. PHP Philippine peso Q1 First quartile (25th percentile) Q3 Third quartile (75th percentile) QC Quality Control RA Republic Act RDF Revolving Drug Fund ROP Republic of the Philippines RHU Rural health unit TB Tuberculosis UNICEF United Nations Children's Fund USD United States Dollar VAT Value Added Tax WHO World Health Organization WPRO Western Pacific Regional Office

Table of Contents

Acknowledgements ................................................................................................................. i

Funding ............................................................................................................................... i Conflicts of Interest Statement ............................................................................................. i

Executive summary ............................................................................................................... iii

List of Abbreviations and Acronyms....................................................................................... vi

1. Introduction ........................................................................................................................ 1

1.1 Socio-demographic and Health Situation ..................................................................... 1 1.2 The Health System ...................................................................................................... 4 1.3 Medical and pharmaceutical education ........................................................................ 5 1.4 Provision of medicines in the Philippines ..................................................................... 6 1.5 Medicine prices in the Philippines ................................................................................ 8

1.5.1 The Generics Act 1988 ......................................................................................... 9 1.5.2 National Drug Policy – Pharmaceutical Management Unit-50 ..............................10 1.5.3 Parallel drug importation ......................................................................................10 1.5.4 Botika ng Barangays ............................................................................................10 1.5.5 Health franchise outlets .......................................................................................11 1.5.6 P100 Program ......................................................................................................11 1.5.7 The Cheaper Medicines Act 2008 ........................................................................11

1.6 Medicine price monitoring ...........................................................................................12 1.7 Public procurement of medicines ................................................................................13 1.8 Objectives of this study ...............................................................................................16

2. Methods ........................................................................................................................... 17

2.1 Selection of medicines ................................................................................................17 2.2 Selection of facilities ...................................................................................................19 2.3 Data collection ............................................................................................................20 2.4 Data analysis ..............................................................................................................21 2.5 Ethical clearance and endorsement ............................................................................22 2.6 Confidentiality .............................................................................................................22

3. Results and Analysis ........................................................................................................ 23

3.1 General.......................................................................................................................23 3.2 Summary national procurement price MPR ................................................................23 3.3 Summary procurement price MPR by level of procurement ........................................28 3.4 Individual hospital procurement MPRs by level of procurement ..................................29 3.5 Individual hospital procurement MPRs by region ........................................................30 3.6 Variability in procurement prices of individual medicines ............................................30 3.6.1 Variations in prices of generic medicines between and within hospitals ...................37 3.7 Revolving drug funds (RDFs) ......................................................................................41 3.8 P100 project ...............................................................................................................42 3.9 PITC Pharma parallel drug imports .............................................................................43 3.10 Procurement of originator brands ..............................................................................44

4. Stories from the field......................................................................................................... 48

5. Discussion ........................................................................................................................ 51

5.1 Main discussion ..........................................................................................................51 5.2 Limitations of this study ..............................................................................................55

6. Recommendations ........................................................................................................... 56

7. References and bibliography ............................................................................................ 59

Annex 1. National Pharmaceutical Sector Form ................................................................... 62

1

1. Introduction

The Philippines is an archipelago of over seven thousand islands situated to the south-east of China in

the Pacific Ocean, just north of the equator. Almost all areas of the Philippines experience a tropical

climate characterised by warm to hot temperatures and high humidity year round. The total land area

is estimated at around 300,000 sq. km.

The Philippines has a colorful history reaching from the original indigenous inhabitants, through

almost 400 years of Spanish colonisation (1521-1898) and about 50 years of control by the United

States of America (USA) (1898-1946 including a period of occupation by the Japanese during World

War II) until its independence was officially recognised on 4 July 1946. The country stands out as a

Christian, largely Roman Catholic, country in the midst of the surrounding Buddhist and Hindu

nations of South-East Asia. English is widely spoken, and Filipino or Tagalog are the standardised

indigenous language with many different dialects commonly spoken.

Upon independence, the Philippines was established as a republic and adopted a bicameral political

system with the Congress consisting of the Senate (24 senators elected nationally) and a House of

Representatives (up to 250 members) consisting mostly of popular representatives elected at the local

level. The president is the head of state and government and is elected by popular vote to a single six

year term.

Administratively, the country is broken down into 17 regions, 81 provinces, 136 cities, 1,494

municipalities, 41,995 barangays (as of end of 2007). Local government units (LGUs) run the

provinces (under a governor), cities and municipalities (under a mayor) and the barangays (under a

barangay captain and council) under the Local Government Code of 1991. The capital city of the

Philippines is Manila, actually a conglomeration of 16 cities and the Municipality of Pateros and often

referred to as Metro Manila or the National Capital Region (NCR). The population of NCR is close to

12 million, although there are residential suburbs extending beyond the boundaries into neighboring

provinces.

1.1 Socio-demographic and Health Situation

The population of the Philippines is estimated to be 92.23 million in 2009, with an official inflation

rate of 8.0% in December 2008, an unemployment level of 6.8% (underemployment 17.5%) and

functional literacy of 84% (NSO website 2009). The top four causes of morbidity reported in 2006

were pneumonia, diarrheal disease, bronchitis and hypertension (NSO 2008), with tuberculosis also

among the top ten. About 30% of Filipinos are considered as living in poverty according to

government statistics (NSO 2008).

The Philippines is classified by the World Bank as a developing country with a lower-middle-income

economy, which according to the International Monetary Fund has a per capita gross domestic product

(pcGDP) of $3,383 (2007; PPP-adjusted; www.imf.org). Relevant health demographic and health

financing data are shown in Table 1 although it should be noted that significant health inequalities

exist between urban and rural areas and even between different urban or rural areas (see section 1.2

Health System). Expenditure on health as a proportion of GDP is around 3.3% and per capita

government spending on health is $88 (PPP-adjusted) (Table 1; Figure 1 & Figure 2). There is

substantial out-of-pocket expenditure on health and on medicines.

2

Figures 1 and 2 provide some comparison of health expenditure in the Philippines versus other

countries in the Asian region.

Table 1. Demographic and health indicators for the Philippines

Demographic indicators

Gross national income per capita (PPP international $) 3,430

Population (in thousands) total 86,264

Population annual growth rate (%) 2

Population in urban areas (%) 63

Population living below the poverty line (% living on < US$1 per day) (2003) 14.8

Population proportion under 15 (%) 36

Population proportion over 60 (%) 6

Adult literacy rate (%) (2003) 92.6

Health personnel & status indicators

Physician density (per 10,000 population) (2002) 12

Pharmaceutical personnel density (per 10,000 population) (2002) 6

Nursing & midwifery personnel density (per 10,000 population) (2002) 61

Dentistry personnel density (per 10,000 population) (2002) 6

Infant mortality rate (per 1,000 live births) both sexes 24

Life expectancy at birth (years) both sexes 68

Maternal mortality ratio (per 100,000 live births) (2005) 230

Prevalence of HIV among adults aged <15 years (per 100,000 population) (2005) <100

Incidence of tuberculosis (per 100,000 population per year) 287

Health expenditure indicators

Total expenditure on health as a percentage of gross domestic product 3.3

General government expenditure on health as a percentage of total government expenditure 6.4

General government expenditure on health as a percentage of total expenditure on health 39.6

Private expenditure on health as a percentage of total expenditure on health 60.4

Private prepaid plans as a percentage of private expenditure on health 10.6

Out-of-pocket expenditure as a percentage of private expenditure on health 80.2

Social security expenditure on health as a percentage of general government expenditure on health 27.2

Per capita government expenditure on health (PPP int. $) 88

Per capita government expenditure on health at average exchange rate (US$) 18

All data from the WHO Statistical Information System (www.who.int/whosis) and from 2006 unless otherwise indicated.

3

Figure 1. Regional comparison of expenditure on health as a percentage of GDP

Figure 2. Regional comparison of per capita government expenditure on health

Total expenditure on health as percentage of gross domestic product

6.6

6

4.3

3.6 3.5 3.4 3.3

2.2

0

1

2

3

4

5

6

7

Viet Nam Cambodia Malaysia Lao PDR Thailand Singapore Philippines Indonesia

Pe

rcen

tag

e o

f G

DP

Per capita government expenditure on health (PPP int. $)

413

226 223

88 86

44 43

18

0

50

100

150

200

250

300

350

400

450

Singapore Malaysia Thailand Philippines Viet Nam Indonesia Cambodia Lao PDR

Per

cap

ita e

xp

en

dit

ure

(P

PP

in

t. $

)

4

1.2 The Health System

The central public health body is the Department of Health (DOH), which is responsible for policy

development, implementation and regulation. It also directly oversees the operations of specialised

hospitals, regional hospitals and medical centers (DOH-retained hospitals; 72 in total). A Center for

Health Development office (CHD) provides the DOH with a presence in each of the 17 regions to

provide regional oversight and manage DOH operations.

Various strategies and reforms have been implemented within the health sector over the years, but one

which continues to impact significantly on health care delivery is the devolution of health services in

1992. With this reform, the operation of health services were devolved from central government to

local government units (LGUs) i.e. provincial and city/municipal authorities. Under the devolved

system, the provincial government implements health programmes in the province and runs provincial

and district hospitals while city and municipal offices are in charge of health programmes within cities

and municipalities and run rural health units (RHUs), barangay health stations (BHSs) and, where they

exist, the city or municipal hospitals (Figure 3). A lack of adequate management skills at the LGU

level with communication breakdowns between the various levels of government led to a decline in

utilisation of services (Grundy et al. 2003) and resulted in variation and inequities in the provision of

health care across LGUs. Further reforms have been instituted to try and address the limitations of the

devolved health system and Inter Local Health Zones (ILHZs) were established to facilitate the

coordination of health activities between neighboring municipalities, their province and the DOH-

retained services within the associated region.

Figure 3. The devolved health system of the Philippines

From DOH (2002)

5

According to the WHO Country Health Profile for the Philippines, factors impeding the effective

delivery of health care can be summarised as follows (WHO WPRO 2006):

1) inadequate health care financing;

2) over-reliance on tertiary rather than primary care, combined with ineffective public health

programmes;

3) migration of trained health workers;

4) high medicine prices, with high out-of-pocket payments, and irrational medicines use;

5) non- or inadequate enforcement of pharmaceutical and other regulations; and

6) insufficient prevention and control of new and non-communicable diseases.

Much of the health care in the Philippines is provided through the private sector with around 60% of

spending on health care coming from out-of-pocket payments (WHO CHIPS 2006) and there are many

private clinics and hospitals of varying sizes. In 2006, there were 703 public hospitals and 1,068

private hospitals although bed capacity was higher in the public sector (NSO 2008). Public health

facilities and services are perceived as of lower quality in all aspects than those in the private sector

leading to the bypassing of public primary care facilities and overutilisation of government hospitals

and private health care institutions for primary care (World Bank 2001). Despite extensive migration

of health professionals, physician density is 12 per 10,000 population and pharmacist density at 6 per

10,000 inhabitants (Table 1) but there is inequity in the distribution of health services and health

personnel between urban and rural areas, with Metro Manila in particular having a high concentration

of health facilities and personnel.

A degree of public health insurance was introduced in the Philippines by the establishment of

Medicare in 1969, which focused on coverage of hospital care with payment of costs paid up to a

preset limit for members, who were mostly employed workers. In 1995, the Philippine Health

Insurance Corporation (PhilHealth) replaced Medicare and has worked to increase coverage of poor

and indigent Filipinos. Current membership is reported as 73% of the population with about 2.9

million indigent families enrolled (PhilHealth 2009). Four categories of membership exist, formally

employed workers, indigents, retirees, and individually paying members, and reimbursement is based

on in-patient care with caps for each service, including medicines (Obermann et al. 2006, Wagner et

al. 2008). Outpatient benefits, such as those for maternal care and tuberculosis, are extremely limited

and there is currently no coverage for outpatient medicines (Wagner et al. 2008). Unregulated pricing

of medicines in hospitals and the PhilHealth reimbursement cap can leave patients with substantial

out-of-pocket expenditures (Obermann et al. 2006).

1.3 Medical and pharmaceutical education

The Philippines has a very high adult literacy rate of over 90%. Medical, pharmacy and nursing

education can be pursued at a number of universities and other training institutions, both public and

private. There has been an increase in the number of training facilities to meet growing demand from

those who see medical-related education as a means to obtain overseas employment. Migration of

health workers has been significant in the Philippines, being both a problem for local health systems

and an economic bonus in terms of remittances from overseas workers. The Faculties of Pharmacy at

the University of the Philippines (public) and the University of Santo Tomas (private, established

1871) are among the largest and most renowned training institutions for pharmacists. Training is

largely along the lines of a traditional pharmacy curriculum, and clinical or ward pharmacy activities

are not common. Graduates can expect to work in drug stores and pharmacies, in hospital practice, in

6

regulatory positions at the Bureau for Food and Drugs or in the private distributor/manufacturer

setting.

1.4 Provision of medicines in the Philippines

The Philippines has an established pharmaceutical industry dating back to 1900. According to industry

statistics, in 2007 there were 471 registered pharmaceutical companies with almost 50% of these being

‘foreign’-owned (PHAP 2008) and largely representing the multinational pharmaceutical companies.

The Philippines pharmaceutical market was valued at around US$2 billion in 2007, representing about

4% of the Asia Pacific market (excluding Japan) with two thirds directed at prescription medicines

(PHAP 2008). The top 20 pharmaceutical companies represent over 80% of the market, with most of

the locally owned pharmaceutical manufacturers involved in the production of generic medicines.

Over 16,000 pharmaceuticals are registered with the Bureau of Food and Drugs, the medicines

regulatory authority which is part of the Department of Health but operates largely autonomously.

As of the end of 2008, there were 275 licensed pharmaceutical manufacturers and 448 drug traders

producing or importing medicines that were being distributed through 4,165 licensed pharmaceutical

wholesalers (distributors). The distributors, who may be the parent manufacturer/trader in some

instances, supply the medicines to about 30,000 retail outlets, of which roughly 21,000 are private

drugstores, 1,700 are hospital pharmacies (private and public) and the remainder are community drug

stores (e.g. Botika ng Barangay; see section 1.5.4) (based on list of BFAD-licensed outlets end 2008).

More than 60% of the distribution market operates through Zuellig Pharma Inc and its wholly-owned

subsidiary Metro Drug Inc (PHAP 2008). These companies mostly deal with multinational companies

and specific ‘branded-generics’ (of higher cost and supposedly ‘assured’ quality based mostly on the

manufacturer name). The largest local manufacturer, United Laboratories, is also associated with

‘branded-generics’ and undertakes its own distribution.

Due to the inefficiencies in delivery of primary care, almost 90% of medicine sales (by value) occur

through private retail outlets with the remainder through hospitals and around 70% of these through

private hospitals due to the limited budgets of public facilities (Kanavos 2002, PHAP 2008; Figure 4).

Chain drugstores dominate - about 60% of the market - of which Mercury Drug Corporation is the

dominant player with about 7,000 pharmacies accounting for more than 50% of the market and 70% of

Originator brands, ‘branded-generics’ and generics

In this report, original brand name medicines are identified as “originator brands”. All other

medicines are considered “generics” i.e. equivalent products containing the same active ingredient

which are usually produced by competitors when the patent on the originator brand expires or is not

enforced (the originator brand parent company or a subsidiary may also produce generics of their

product). These generic equivalents may be marketed under a brand name (often called “branded

generics”) or the generic name of their active ingredient. In the Philippines, certain generic

equivalents made by some pharmaceutical companies are viewed as being of superior quality to

similar generic products and have higher demand and are sold at higher prices. These are referred to

colloquially as ‘branded-generics’. Where this recognition is made in the text, the phrase is placed in

single quotation marks and hyphenated to distinguish from the other accepted meaning described

above.

7

the chain operations (PHAP 2008). Chain pharmacies are more likely to sell products of multinational

companies and ‘branded-generics’ than cheaper generic counterparts.

The pharmaceutical market is highly segmented with richer Filipinos utilising private drugstores and

hospitals and tending to use originator brands and ‘branded-generics’. Middle classes follow suit but

with some use of public facilities, and the poor obtain their medicines from drugstores, public facilities

and community outlets and rely to a greater extent on cheaper generics (Kanavos 2002).

Some of the reasons underlying this market segmentation and dominance of expensive originator

brands and ‘branded-generics’ are as follows (Kanavos 2002):

A. Inadequate assurance of quality of generics by the Bureau of Food and Drugs (BFAD)

B. Strong marketing by dominant manufacturers and distributors and support of their products by

the prescribing physicians.

C. Lack of competition from public and NGO outlets, which concentrate on providing cheaper

generics to the poor.

D. Information imbalance with patients relying on physician advice and lacking knowledge of

competing products.

This market segmentation and the distribution channels that operate in the Philippines’ pharmaceutical

sector need to be appreciated due to the effects they have on access to essential medicines and pricing

structures. For example, if low-priced generics are not stocked by chain pharmacies or private

hospitals, or if the public sector market share is not increased, then the majority of the population will

not have access to them (Figure 4).

Figure 4. Pharmaceutical distribution channels in the Philippines

Medicines must be registered with the BFAD prior to marketing which issues them with a Certificate

of Product Registration (CPR). A limited number of over-the-counter medicines may be sold through

suitably licensed general retail outlets without a pharmacist, while most medicines are restricted to

sale through retail pharmacies or drugstores which should be staffed by a licensed pharmacist. Valid

physician prescriptions should be presented for sale of prescription medicines but, in practice, many

pharmacies will sell most prescription medicines on demand.

Medicines are commonly sold as individual units e.g. by tablet, capsule or bottle without additional

packaging or labeling. Physicians do not dispense apart from certain vaccines. However, physicians

Self-distributing manufacturers / traders/ distributors /

sub-distributors

Drugstores

80%

Hospitals

10%

Other retail

10%

Chain

63%

Independent

17%

Private

7% Public

3% Private

10% Public 0.3%

Diagram and numbers based on PHAP (2008)

8

may have business and financial interests in specific pharmacies. Many government doctors will also

operate private practices to supplement their income.

1.5 Medicine prices in the Philippines

Medicines are generally seen as expensive in the Philippines compared to neighbouring countries apart

from Japan (Kanavos et al. 2002, Batangan et al. 2005, Pabico 2006). As an example, Table 2 shows

the comparative retail prices of selected medicines across five developing countries and Canada in

1995 and Table 3 compares 2005 trade prices between the Philippines, India and Pakistan for certain

originator brand products. While some of these discrepancies may be explained by exchange rate

variations and different sources of list prices, these would not account for the differences seen.

In 2005, Batangan and colleagues conducted a medicine price survey utilising the standardised

methodology developed by the World Health Organization (WHO) and Health Action International

(HAI) in which local prices are compared to international reference prices (the Philippines was also

one of the countries in which the methodology was pilot tested in 2002). They found, among other

things, that prices for originator brand medicines sold from private retail outlets were on average 15

times greater than the reference price, while lowest-priced generic equivalents were more than six

times the reference price.

Table 2. Comparative Retail Prices of 100 Units (Tablets/Capsules) of 12 Commonly Used Medicines in Five Developing Asian Countries and Canada, July-September 1995 (in US$)

Medicine name Strength Canada India Indonesia Nepal Pakistan Philippines

Amoxicillin

250 mg 8 9 10 8 5 22

Amoxil® (amoxicillin)

250 mg 14 10 40 9 8 29

Tagamet ® (cimetidine)

200 mg 25 - 56 - 14 95

Co-trimoxazole

480 mg 6 5 7 3 3 20

Septrin® (co-trimoxazole)

480 mg 6 - 25 3 5 53

Odofenac

50 mg 30 2 48 2 7 25

Voltaren® (diclofenac)

50 mg 46 2 52 - 18 37

Erythromycin

250 mg 6 12 10 10 5 20

Erythrocin® (erythromycin)

250 mg 9 11 37 11 7 35

Adalat ® (nifedipine)

5 mg 28 2 18 - 2 40

Inderal® (propranolol)

40 mg 15 8 74 - 28 25

Zantac® (ranitidine)

150 mg 81 3 150 3 39 95

After Pabico (2006) with original source Lim (1997).

9

Table 3. Comparative trade prices of selected originator brand products in the Philippines, India and Pakistan in 2005 (in Philippines pesos)

Medicine Active

ingredient Manufacturer Philippines India Pakistan

Ponstan 500 mg tab Mefenamate Pfizer 22 3 1.4

Lopid 300 mg cap Gemfibrozil Bayer 36 12 3

Buscopan 10 mg tab Hyoscine Pfizer 10 2 0.6

Bactrim 400/80 mg tab Co-trimoxazole Boehringer 16 1 1

Adalat Retard 20 mg tab Nifedipine Roche 38 1 4

Lasix 40 mg tab Furosemide Aventis 9 0.5 1

Plendil ER 5 mg tab Felodipine AstraZeneca 36 5 8

Diamicron 80 mg tab Gliclazide Servier 11 7 5

Ventolin 50 mcg inh Salbutamol Glaxo 315 123 62

Voltaren 50 mg tab Diclofenac Novartis 18 1 4

Isordil 5 mg SL tab Isosorbide DN Wyeth 10 0.2 0.2

Imodium 2 mg cap Loperamide Janssen 11 3 2

Fortum 1 g inj Ceftazidime Glaxo 980 390 304

Data based on MIMS 2005, Philippines; IDR 2005, India; Red Book 2005, Pakistan respectively. After ROP (2007) The situation in public facilities was not any better, and in many cases the medicines cost more from

government hospital pharmacies than private drugstores. The study also attempted to assess the

components that made up the final selling price of the medicines. Due to difficulties in sourcing

primary data, the researchers used unvalidated secondary sources which indicated that the cumulative

markup on an imported medicine would range from 89.5% to 273%.

Indeed, the high prices of medicines in the Philippines have been the subject of a number of studies

and papers (e.g. Kanavos et al. 2002, Batangan 2005, Balasubramaniam 1996, Lim 1997), so far

apparently without major impact. This is not to say that action has not been taken by the Philippines

government in an attempt to make essential medicines affordable and accessible to the poor.

1.5.1 The Generics Act 1988

In 1988, the government of the Philippines under President Aquino introduced Republic Act 6675 (RA

6675/1988), known as the Generic Drug Act of 1988 in an attempt to increase the use of generic

medicines and reduce medicine prices. The Act and its subsequent Administrative Order (AO

51/1998) aimed to increase use of generic medicine names throughout the supply chain from

importation/manufacture through to prescription and dispensing, to increase the availability of low-

priced generic medicines, to encourage use of generic medicines together with attendant advantages in

health service training and operation. According to the Generics Act (RA 6675/1988) and associated

regulations (AO 51/1988) all public establishments should procure medicines by generic name and

according to “generic use”. However, originator brand or other medicines “identified by brand names”

may be procured “where price and availability constraints make it necessary”. This is intended for

circumstances in which the branded medicines are the only products available or offered at more

advantageous prices than purely generic medicines. Further to this, Executive Order 49 of 1993 (EO

10

49/1993) limited public procurement to those medicines listed in the Philippines National Drug

Formulary. However, these measures did not appear to have the desired effect, and medicine prices

have remained high. This is commonly attributed to intensive marketing by the dominant

manufacturers and importers of originator brands and ‘branded-generics’ coupled with the existing

market imbalances and failures (DOH 2005).

1.5.2 National Drug Policy – Pharmaceutical Management Unit-50

One of the projects of the Arroyo administration in the Philippines was the “Half-Priced Medicines

Program” of 2000 in order to increase availability and access to cheaper medicines in the Philippines.

The National Drug Policy – Pharmaceutical Management Unit-50 (Pharma-50 or PMU-50; the 50

relating to 50% cheaper medicines) is an ad hoc unit established in the Department of Health (DOH)

to oversee the programme’s implementation (DOH 2009) as the DOH does not otherwise have a

permanent pharmaceutical policy unit. A number of initiatives were instituted including parallel drug

importation, establishment of pharmacies to sell cheaper generics, establishment of village pharmacies

in remote or disadvantaged communities, promotion of the use of generic medicines, the Philippine

National Drug Formulary (PNDF) and an Essential Medicines Drug Price Monitoring System

(EDPMS) (DOH 2009). The Philippines does not have a comprehensive National Medicines Policy

but the PMU-50 takes its direction and authority from the policy statements made as part of the

Generics Act 1988 (RA 6675/1988) and subsequent legislation.

1.5.3 Parallel drug importation

Facilitated by the above legislation and initiatives, the government instructed the Philippines

International Trading Corporation (PITC) under the Department of Trade and Industry, through its

subsidiary PITC Pharma, to undertake parallel importation of selected originator brands with the aim

of selling them at half the price of the same brands currently available in the Philippines. These,

mostly sourced from India and Pakistan, were initially made available to public hospital pharmacies

and later on to certain private retail outlets which PITC Pharma established and/or entered into

contract with (franchised under Botika ng Bayan; ‘ng’ pronounced ‘nang’) (PITC 2009). There were

over 1,400 of these outlets in 2007 (Arroyo 2007). PITC Pharma was also tasked with procuring low

cost generic medicines for sale through these retail outlets, the DOH hospitals and through village

pharmacies (Botika ng Barangays).

1.5.4 Botika ng Barangays

A Botika ng Barangay (BnB) is a community-based and owned retail outlet licensed under BFAD and

authorised to supply a list of over-the-counter (non-prescription) medicines as well as a short list of

essential prescription medicines (Table 4). These outlets are commonly run by Barangay Councils but

may also be operated by community supported NGOs or other non-profit organisations. Each should

have a supervising pharmacist who visits at least every two weeks. A BnB is established with an

‘operating capital’ of PHP25,000 provided from PITC Pharma in the form of an initial supply of

medicines valued at this amount (the same package is provided to each newly established BnB). The

sales from these medicines go towards a revolving fund for the replenishment of stock as well as a

stipulated percentage for the operations of the BnB. Replenishment was initially supposed to be

through PITC Pharma but this has been broadened to allow replenishment through other means

including licensed distributors. There are designated BnB coordinators within each CHD of the DOH

to oversee their operations and monitor compliance with prescribed record-keeping and procedures.

11

Table 4. List of medicines authorised for sale in Botika ng Barangay community outlets

Category Generic name Category Generic name

Analgesic/antipyretics Paracetamol Antianemic Ferrous sulfate

Antacid Aluminium hydroxide+magnesium hydroxide

Antifungals Benzoic acid/salicylic acid

Anthelmintics Pyrantel embonate Clotrimazole

Mebendazole Miconazole

Antialleric/antipruritic Diphenhydramine Chlorphenamine

Vitamins Vitamins C, B1+B6+B12, A, multivitamins

Non-steroidal anti-inflammatory drugs (NSAIDs)

Mefenamic acid Ibuprofen Aspirin 300mg tab

Vitamins & minerals Folic acid+ferrous sulfate Zinc sulfate

Antithrombotic Aspirin 80mg tab Minerals Calcium lactate Calcium carbonate

Anti-vertigo Meclozine Disinfectants Hydrogen peroxide Ethyl alcohol Povidone iodine

Bronchodilator/anticough Lagundi (Vitex negundo) Anti-infectives* Amoxicillin Cotrimoxazole

Diuretic/anti-urolithiasis Sambong (Blumea

balsamifera) Other prescription drugs*

Antitussive Dextrometorphan � Antidiabetic Metformin

Antimotility Loperamide � Antidiabetic Glibenclamide

Electrolytes Oral rehydration salts � Antihypertensive Metoprolol

Laxative/cathartic Bisacodyl Senna concentrate Castor oil

� Antihypertensive Captopril

Antiscabies, antilice and antifungal

Benzylbenzoate Crotamiton Sulfur

� Antiasthmatic Salbutamol

*requiring prescription by a physician and should be dispensed by supervising pharmacist From Department Memorandum 38/2008 (DOH 2008) which specifies the strengths and dosage forms which may be made available.

1.5.5 Health franchise outlets

Some NGOs have taken similar steps to increase accessibility of lower cost generics by establishing

franchise outlets e.g. Botika Binhi, HealthPlus outlets. These operate along similar lines to BnBs or as

non-profit pharmacies with revolving funds, their own supply chain or distribution network and, in

some cases, offering a wider range of health services.

1.5.6 P100 Program

In 2008, PMU-50 launched the P100 programme in conjunction with PITC Pharma under which the

latter would make designated packs of selected essential medicines available for a price of P100 or

less inclusive of any mark-ups (Table 5).

1.5.7 The Cheaper Medicines Act 2008

To complement these measures, RA 9502/2008, the Universally Accessible Cheaper and Quality

Medicines Act of 2008 (colloquially, “the Cheaper Medicines Act”), became effective on July 4, 2008,

amending RA 6675/1998 and other legislation in an attempt to further address the situation by making

the laws TRIPS-compliant (and permitting parallel importation and compulsory licensing) and

potentially increasing competition in the market by facilitating entry of externally produced generic

medicines.

12

Table 5. List of drugs for P100 project and their selling prices (December 2008)

Medicine Treatment course

# of dosage units

P100 selling price (pesos)

1 Allopurinol 100 mg tab 1 tab once a day 30 50

2 Amlodipine 10 mg tab 1 tab once a day 6 100

3 Amlodipine 5 mg tab 1 tab once a day 12 100

4 Amoxicillin 500 mg cap 3x a day for 7 days 21 70

5 Ascorbic Acid 500 mg tab 1 tab once a day 30 50

6 Atenolol 50 mg tab 1 tab once a day 14 70

7 Cefalexin 500 mg cap 3x a day for 7 days 21 100

8 Ciprofloxacin 500 mg tab 2x a day for 7 days 14 50

9 Clindamycin 150 mg cap 4x a day for 7 days 28 100

10 Co-amoxiclav 625 mg tablet 2x a day for 7 days 14 -

11 Cotrimoxazole 800 mg/160 mg tab 2x a day for 7 days 14 25

12 Felodipine ER 10 mg tab 1 tab once a day 3 100

13 Felodipine ER 2.5 mg tab 1 tab once a day 7 100

14 Felodipine ER 5 mg tab 1 tab once a day 5 100

15 Glibenclamide 5 mg tablet 1 tab once a day 30 25

16 Metformin 500 mg tablet 3x a day 90 100

17 Metoprolol 100 mg tablet 1 tab once a day 30 100

18 Metoprolol 50 mg tablet 2x a day 90 100

19 Metronidazole 500 mg tab 3x a day for 7 days 30 50

20 Omeprazole 20 mg capsule 1 tab once a day 15 75

21 Ranitidine 150 mg tab 1 tab once a day 28 75

22 Salbutamol 2 mg/2.5 mL nebules 3-4 x a day or as needed 9 100

23 Simvastatin 10 mg tab 1 tab once a day 15 75



(taken from a leaflet available from a P100 outlet; December 2008)

1.6 Medicine price monitoring

Given the concerns about the high prices of medicines in the Philippines, various attempts have been

made at monitoring medicine prices. The following information on medicine price monitoring is

available from the DOH website:

1. Of unclear origin, but probably emanating from the Procurement and Logistics Service of DOH

(entitled “Drugs and Supplies Price Monitoring [historical data]”), this page provides prices of

medicines as well as a wide range of other supplies from 2001. The supplier, source, date and

mode of procurement are given in addition to the price.

http://home.doh.gov.ph/drugs_price_mon/all_supplies.htm

2. This data from the Procurement and Logistics Service of DOH (under which COBAC operates)

provides information on the prices of “Drugs, Medicines and Vaccines” over the years 2000 to

2003. The procurement method yielding the price is not given but it could be assumed to be public

bidding. http://www2.doh.gov.ph/pls/drugs_price.htm

3. Information from PMU-50 entitled “Essential Drug Price Monitoring” compares private retail

outlet prices i.e. selling prices, with those from private hospital pharmacy and public hospital

pharmacy for a list of essential medicines. Monthly price bulletins are given for 2004 and 2005

13

only. Each presents the prevailing (presumably DOH price) for the three month period ending the

month of the report for ‘branded’ and ‘generic’ medicines, the range of prices for the month

reported and the facility and region with the lowest price. The exact method of reporting is not

described, nor whether the data was validated. http://www.doh.gov.ph/ndp/price_monitoring

4. An initiative between PhilHealth and PMU-50/DOH to increase transparency in medicine prices

through the publication of a Drug Price Reference Index with minimum and maximum prices for a

range of PNDF medicines is apparent. Unfortunately the price list does not give the method of

obtaining the prices, it is undated (although it appears to have been created in 2006) and does not

appear to have been revised or repeated.

http://www.doh.gov.ph/fourmulaone/dpri; http://www.doh.gov.ph/files/pharma50_final_dpri.pdf

The more recent attempts at monitoring prices have been spearheaded by the PMU-50 unit at DOH.

This unit (or another to supersede or complement it) has the mandate, under the Cheaper Medicines

Act (RA 9502/2008), to establish an electronic price monitoring system to support the regulation of

medicine prices. Plans are already underway for implementing this, with the intention to collect

pricing information from pharmaceutical traders (importers), manufacturers, distributors, retailers as

well as procurement prices from public entities.

1.7 Public procurement of medicines

Government procurement of medicines in the Philippines is subject to the Government Procurement

Reform Act (RA 9184/2003; GPR Act) which stipulates the procedures and methods to be used in

public procurement. All procurement is supposed to be undertaken as competitive bidding except

under “highly exceptional circumstances”. Conditions are set for the use of alternative methods of

procurement including limited source bidding (for specialised goods), direct contracting (single

source, proprietary or critical goods), repeat orders (superior winning bids of prior bidding), shopping

(emergency procurement under PHP50,000 [about USD1,000] or ordinary supplies under PHP250,000

[about USD5,000]), and negotiated procurement (following two failed biddings and other

circumstances). The Act also initiated a central electronic system for advertising tenders and posting

notices of awards – the Philippines Government Electronic Procurement System (PhilGEPS)

(http://www.philgeps.net). While the GPR Act went some way to increasing transparency in public

procurement in general, it is still recognised that corruption is a challenge in the Philippines, within

procurement and beyond, which still needs to be effectively dealt with (Quimson 2006).

Central DOH procurement: With the devolvement of health care in 1992, procurement of

medicines was largely made the responsibility of local government units, with DOH-retained hospitals

and some CHDs performing their own public bidding. The DOH, through the Central Office Bids and

Awards Committee (COBAC), undertakes limited central procurement of medicines for vertical

programmes e.g. tuberculosis, vitamin A supplementation, National Filariasis Elimination Program.

PITC Pharma performs central procurement of medicines for the Botika ng Barangay programme and

the P100 project, while vaccines for the Expanded Program on Immunization are procured by

UNICEF under the terms of a Memorandum of Agreement.

Local government procurement: LGUs, whether at provincial or city/municipal level, are

required by the GPR Act to establish bids and awards committees. These function in conjunction with

the General Services Office (GSO) to perform procurement of medicines for the health facilities under

their remit. In some cases, city hospitals may undertake their own procurement. Local government

14

procurement faces many challenges including limited budgets for medicines, full budgets not being

received, difficulties in quantification, delays in procurement and delivery of medicines through the

GSO and corrupt practices (Anon 2003; Hartigan-Go & Carameng 2007).

Procurement in the Philippines has been the subject of a number of studies. Some of these have

specifically examined the processes of medicines procurement.

Procurement Watch Inc: Procurement Watch Inc. (PWI) is a local non-governmental organisation

(NGO) that aims to increase transparency, accountability and efficiency in public procurement by

observing selected public biddings and providing capacity building services on procurement and

monitoring of procurement activities (http://www.procurementwatch.org.ph/index.htm). Initial

attempts by PWI to monitor public bidding by LGUs in Metro Manila under the new GPR Act were

unsuccessful due to suspicion on the part of the procuring authorities and incomplete implementation

of the procurement reforms at local government level (PWI 2002). Later, PWI developed a

methodology for measuring the efficiency of public procurement by examining the processes of

procurement relative to the GPR Act, and comparing the prices awarded in the bid to those available in

the market. This Differential Expenditure Efficiency Measurement (DEEM) tool was piloted at a

DOH-retained hospital in Metro Manila during 2006 (Paredes 2008). The procurement of all goods

during 2005 was examined, including medicines. Difficulties were encountered in determining real

market prices of medicines but it was generally found that the hospital was paying prices similar to the

list prices of distributors (suggesting no benefit in performing bidding). There were some cases where

it was found that procurement rules were not being followed although the conclusion was that there

were no major governance issues. The DEEM tool has since been simplified but has not been used

again (C. Belasario, personal communication 2009).

OECD baseline assessment: The OECD baseline assessment of the Philippine public procurement

system (OECD 2006) examined procurement in general. It found that in the GPR Act there was an

adequate legal framework and regulations with an established complaints procedure. However, it was

inefficient with oligopolies existing in the market, there was a lack of consistent application of the Act,

and no standardised record-keeping across LGUs. In addition, it found that there was no analysis of

procurement data on a national scale, which was compounded by the fact that PhilGEPS was not used

consistently by LGUs and there was no posting of bid awards information. The report noted that many

constraints influenced private sector participation in public procurement, and therefore affected

competition levels such as, delayed bureaucratic payment processes, politician interference in bidding

especially at LGU level, and problematic conditions being attached to procurement requirements.

COA performance audit: The Philippine Commission on Audit (COA) carried out a performance

audit of the DOH procurement system for vaccines and medicines in 2005 to ensure that “vaccines

were made available at the right quantity and drugs and medicines for other programmes are acquired

at the right costs, time, quantity and quality” (COA 2006). The audit found that the DOH central office

procurement was not completely effective in achieving these goals. In particular, vaccine

quantification did not appear to match utilisation, medicines supply of BnBs was often performed

without determining demand in advance, public bidding was delayed, supplier performance was not

monitored and appropriate procurement methods and procedures were not always followed, for

example, one CHD split its purchase requirements so as to perform shopping instead of bidding.

15

IBRD/World Bank case study: A case study of the DOH medicine procurement system in 2003

by Parafina at the Ateneo School of Government on behalf of the International Bank for

Reconstruction and Development under the World Bank (Parafina 2003) looked at central

procurement of anti-tuberculosis medicines and procurement at four CHDs. It found prolonged delays

in delivery with companies often delaying receiving purchase orders (POs) so as to be able to combine

orders before production and avoid the penalty of not delivering within 30 days. Marked price

differences, that reached more than 1,000% for the same item, were seen within and across CHDs.

These could not be explained by the CHD location, temporal factors or volume of procurement but

appeared to be related to the suppliers manipulating prices and the operation of the bidding process i.e.

inefficiencies and influence of corruption. For example, in one case the same distributor provided co-

trimoxazole 800mg/160mg tablets to one CHD at P2.07/tablet while charging P9.80/tablet (373%

difference) to another, in spite of both being the subject of bidding processes, the higher price being

awarded for a greater volume and the bids taking place at the same time. The author recommended

coordination in DOH medicines procurement, consultation with the pharmaceutical industry on drug

pricing and the imposition of ethical rules for procurement agency staff. It was noted that monitoring

and sharing of price information could have helped prevent purchasing at unreasonable prices.

Good governance case studies: In a publication of case studies with regard to good governance in

healthcare in the Philippines, some of the difficulties encountered in local government procurement of

medicines are highlighted (Hartigan-Go & Carameng 2007). The cases describe various scenarios of

approving payment without knowing whether supplies had been received, suppliers providing a

‘percentage’ to the local chief executive or otherwise trying to influence procurement decisions, local

chief executives interfering with the bidding process to ensure a particular supplier wins the award,

accepting deliveries due to insistence of superiors even though the specifications were not met,

pressure to sign for procurements or bid awards, ‘ghost deliveries’ when fewer medicines are

delivered than are invoiced, delayed payment disbursements from the Department of Budget

Management, and delayed procurement and delivery of medicines from a centralised LGU GSO

operating a pooled procurement. A common underlying theme is the pressure from local chief

executives or managers to take part in subversion of usual procedure with the threat of loss of

employment (or even one’s life in some cases) if one does not comply.

WHO good governance in procurement: The WHO undertook a study examining transparency

in the registration, selection and procurement of medicines across four countries, Lao, Malaysia, the

Philippines and Thailand, as part of its Good Governance for Medicines Project (WHO 2006). The

methodology involved interviews with key informants to address indicators of transparency and

governance. With regard to public procurement in the Philippines, although not explicitly stated, the

study only appeared to examine DOH central office procurement by COBAC. The existence of the

GPR Act meant that the Philippines scored well on the framework for transparent procurement and

key informants generally considered that COBAC was following the laid down procedures. The

Philippines vulnerability to corruption score was calculated at 8.5 on a 10 point scale, indicating

‘minimal’ vulnerability. However, given the fact that only COBAC procurement was assessed and the

assessment was based purely on interviews without validation of documentation, the reliability of this

measure is questionable.

WHO/HAI survey: In the study by Batangan and colleagues using the WHO/HAI methodology, the

procurement prices at one tertiary government hospital were examined (Batangan et al. 2005). Of the

34 medicines being surveyed, procurement prices were available for 21, 17 as originator brand and 4

16

as generic equivalents. The prices of originator brand medicines were on average 14 times the

international reference prices, while those of generics were five times the international reference

prices. These results were very similar to the prices seen in private retail pharmacies. There was

significant variation in the prices for both originator brands and generics relative to the reference

prices. However, given the devolved nature of public procurement in the Philippines, it is not possible

to infer whether the observations at this hospital are typical for other hospitals or LGUs.

1.8 Objectives of this study

Medicine prices are a significant barrier for access to essential medicines among the poor in the

Philippines, where most expenditure on medicines is paid out-of-pocket. While there has been some

examination of medicine prices in the Philippines, the methodology employed in some of the older

work is either unclear or open to criticism. The WHO and HAI developed a standardised methodology

for surveying medicines prices and availability in 2003 (WHO/HAI 2003) which was recently revised

in the light of the experiences of surveys in more than 50 different countries (WHO/HAI 2008)

(http://www.haiweb.org/medicineprices). The study of Batangan and co-workers (2005) was

performed using the original methodology which provided an important contribution to the evidence-

base of local medicine prices. However, as mentioned previously, public procurement of medicines

was only examined at a single hospital from which it is difficult to extrapolate observations on a

national basis. In the light of this limitation, it was decided that further investigation of procurement

prices across the various levels of government was needed.

The objective of this study was to assess the efficiency of procurement at various levels of the health

system in the Philippines by evaluating the procurement prices of a selected basket of essential

medicines.

17

2. Methods

The basis of the survey was the standardised methodology of the World Health Action and Health

Action International (WHO/HAI 2008) with data being collected throughout the period of December

2008 to February 2009.

2.1 Selection of medicines

The WHO/HAI survey would normally examine public sector procurement prices alongside a survey

of prices and availability of the same medicines in retail outlets. The list of medicines to be surveyed

is determined by:

� A global list – 14 medicines to be surveyed in all WHO/HAI medicine price surveys

� A regional list – 16 medicines to be surveyed (subject to local registration and

availability) depending on the WHO region in which the survey takes place

� A supplementary list – 20 medicines chosen according to prevalent diseases and local

factors

All the medicines on the global list were surveyed, however, two of the medicines on the regional list

were not included in the survey:

� Metronidazole 200mg tab/cap –in the Philippines (particularly in the public sector) a

250mg strength is commonly used as specified in the Philippine National Drug

Formulary, (PNDF; National Formulary Committee 2005 & 2008).

� Valproic acid 200mg tab/cap – the PNDF specifies a 250mg strength so the 200mg

formulation would be unlikely to be present.

For the list of supplementary medicines, it was decided to use medicines from the study of Batangan

and colleagues (2005) where possible, plus some additional strengths and therapeutic alternatives of

medicines from the global and regional lists which were expected to be used in the Philippines. Of

note:

� Metronidazole 250mg tablets were included to replace the 200mg strength eliminated from the

regional list

� Valproate 250mg tablets could not be added since there is no international reference price

available for them to be used in analysis. In an oversight, no epilepsy medicine was included

to replace the valproate removed from the regional list.

� Atorvastatin 20mg tablets/capsules were included as a medicine that is relatively ‘new’ and

expected to still be under patent (patent status was not confirmed).

� Two medicines were included which were not listed in the PNDF to act as a token measure of

procurement of non-PNDF medicines (amitriptyline 25mg tablets/capsules on the global list

and atorvastatin 20mg tablets/capsules on the supplementary list).

A total of 22 supplementary medicines were surveyed. In all, 50 medicines were surveyed as

recommended in the WHO/HAI methodology (Table 6). In the report, the medicines are referred to by

their generic name only unless further information is needed to avoid confusion.

18

Table 6. List of medicines surveyed for procurement prices in public hospitals

No. Medicine Name Strength Dosage unit Medicine list PNDF Originator

1 Acetylsalicylic acid1 300 mg cap/tab Supplementary yes Aspirin 2 Albendazole2 200 mg cap/tab Regional yes Zentel 3 Amitriptyline 25 mg cap/tab Global no Tryptizol 4 Amlodipine 5 mg cap/tab Regional yes Norvasc 5 Amoxicillin 500 mg cap/tab Global yes Amoxil 6 Amoxicillin susp. 50 mg/mL millilitre Regional yes Amoxil 7 Amoxicillin/clavulanate3 500+125 mg cap/tab Supplementary yes Augmentin 8 Atenolol 50 mg cap/tab Global yes Tenormin 9 Atorvastatin 20 mg cap/tab Regional no Lipitor 10 Atropine 0.5 mg/mL millilitre Supplementary yes - 11 Beclometasone inhaler 50 mcg/dose dose Regional yes Becotide 12 Captopril 25 mg cap/tab Global yes Capoten 13 Cefazolin 1 g/vial vial Supplementary yes Kefzol 14 Ceftriaxone injection 1 g/vial vial Global yes Rocephin 15 Cefuroxime 750 mg/vial vial Supplementary yes Zinacef 16 Cephalexin 250 mg cap/tab Regional yes Keflex 17 Chloramphenicol caps 250 mg cap/tab Supplementary yes Chloromycetin 18 Chloramphenicol susp 125 mg/5mL millilitre Supplementary yes Chloromycetin 19 Ciprofloxacin 500 mg cap/tab Global yes Ciprobay 20 Co-trimoxazole susp. 8+40 mg/mL millilitre Global yes Bactrim 21 Co-trimoxazole tabs 400+80 mg cap/tab Supplementary yes Bactrim 22 Cotrimoxazole tabs DS 800+160 mg cap/tab Supplementary yes Bactrim 23 Dexametasone 0.5 mg cap/tab Supplementary yes Decadron 24 Diazepam 5 mg cap/tab Global yes Valium 25 Diclofenac 50 mg cap/tab Global yes Voltarol 26 Digoxin 0.25 mg cap/tab Supplementary yes Lanoxin 27 Doxycycline 100 mg cap/tab Supplementary yes Vibramycin 28 Enalapril 10 mg cap/tab Regional yes Renitec 29 Fluoxetine 20 mg cap/tab Regional yes Prozac 30 Furosemide 40 mg cap/tab Supplementary yes Lasix 31 Glibenclamide 5 mg cap/tab Global yes Daonil 32 Gliclazide 80 mg cap/tab Regional yes Diamicron 33 Hydrochlorothiazide 25 mg cap/tab Regional yes Dichlotride 34 Ibuprofen 400 mg cap/tab Regional yes Brufen 35 Imipramine 25 mg cap/tab Supplementary yes Tofranil 36 Insulin soluble rDNA 100 IU/mL millilitre Supplementary yes Humilin R 37 Isosorbide dinitrate 10 mg cap/tab Supplementary yes Isordil 38 Metformin 500 mg cap/tab Regional yes Glucophage 39 Methylergometrine inj. 0.2 mg/mL millilitre Supplementary yes - 40 Metronidazole 250mg 250 mg cap/tab Supplementary yes Flagyl 41 Metronidazole 500mg 500 mg cap/tab Supplementary yes Flagyl 42 Metronidazole susp 125 mg/5mL millilitre Supplementary yes Flagyl 43 Nifedipine Retard 20 mg tab Regional yes Adalat Retard 44 Omeprazole 20 mg cap/tab Global yes Losec 45 Paracetamol susp. 24 mg/mL millilitre Global yes Panadol 46 Ranitidine 150 mg cap/tab Regional yes Zantac 47 Salbutamol inhaler 100 mcg/dose dose Global yes Ventolin 48 Salbutamol neb. sol. 5 mg/mL millilitre Supplementary yes Ventolin 49 Salbutamol syrup 2 mg/5mL millilitre Supplementary yes Ventolin 50 Simvastatin 20 mg cap/tab Global yes Zocor

1Aspirin; 2Non-chewable; 3Co-amoxiclav

19

2.2 Selection of facilities

Due to the decentralised nature of procurement in the Philippines, the methodology was modified to

examine procurement prices at the various levels of procurement – DOH-retained hospitals, provincial

hospitals and city/municipal hospitals (hereafter reference to municipal hospitals or authorities should

be taken to include city hospitals or government as well).

Procurement prices in six of the seventeen regions of the Philippines were examined to obtain

representative data and sufficient data points to calculate robust summary variables. The capital region

(NCR) was chosen along with that of Southern Visayas (Region VII) as the two main urban centers

and ports. Four others were selected randomly (although the six regions of Mindanao Island group to

the south were excluded due to security reasons and Cordillera Administrative Region to the north was

excluded due to difficulties in accessing the mountainous region). The regions (and major urban

centers) selected were:

• National Capital Region (NCR; Metro Manila)

• Region I (Ilocos Region; San Fernando City)

• Region IV-A (CALABARZON; Calamba City)

• Region IV-B (MIMAROPA; Calapan City)

• Region VI (Western Visayas; Iloilo City)

• Region VII (Southern Visayas; Cebu City)

One of each type of hospital was selected in each of the six regions based on lists of health facilities

obtained from the DOH. However, in some cases the intended facilities could not be surveyed

resulting in some imbalance from the original design:

Region Problem Result/solution

I - -

IV-A - -

IV-B DOH-retained hospital too remote from main urban centre.

No DOH-retained hospital surveyed

VI Identified municipal hospital had converted to district hospital.

Surveyed district hospital under provincial LGU. While this could over-represent provincial data from this region, significant differences in procurement prices were noted between the provincial hospital and this district hospital due to the former procuring most of its medicines through a DOH-retained hospital rather than the provincial GSO, and the latter supplementing its procurement with purchases under the Inter Local Health Zone

VII Provincial hospital too remote from main urban centre. No municipal hospitals close to main urban center. Identified hospital was district hospital.

Surveyed district hospital under provincial LGU

NCR No provincial hospital. Surveyed additional non-DOH-retained hospital and two municipal hospitals to gain better representation of the NCR health facilities.

In addition, procurement prices were also obtained from the Botika ng Lalawigan of Oriental Mindoro

(BLOM) and centrally from PITC Pharma. Initial intentions to survey central procurement of DOH

20

through COBAC was not pursued since preliminary investigation suggested that few, if any, of the

vertical programme medicines procured were contained on the list of medicines to be surveyed.

2.3 Data collection

At each facility, the latest procurement prices from 2008 for the survey medicines were requested and

recorded on a standard data collection form (2007 procurement prices were accepted in a few cases

where these were the latest available prices and the medicine was still in stock). There was no standard

data source available at all facilities and so a variety of sources were used depending on the facility. In

some cases Notices of Award of bids were used, in others delivery notes from distributors, and in

others printed or computerised price lists (which also specified cost prices). In most cases,

procurement was performed using the generic names of the medicines. Where it was not clear if the

medicine procured was a generic or originator brand, this was clarified with the pharmacy staff.

At the non-DOH hospital surveyed in NCR, there was a policy to have multiple versions of a medicine

available so as to suit a wide range of patients and the prescribing wishes of physicians i.e. often an

originator brand was available as well as a ‘branded-generic’ and a lower cost generic. Whenever

more than one generic product was available, data for the lowest priced was recorded.

At PITC Pharma, management provided the procurement prices from their records after being given a

list of the survey medicines. Multiple procurements had taken place for some medicines.

Documentation to validate the procurement prices provided was requested but was not available for

about half of the medicines given the time constraints. In these cases, the lowest validated

procurement price was used and, if no validated price was available, the lowest unvalidated price was

used (this was the only case when unvalidated prices were used in this report). In some analyses, PITC

Pharma data is excluded due to the centralised nature of its procurement compared to the other

procurement entities and also to remove any influence from unvalidated data.

Where multiple procurements were conducted during the past year, the latest procurement price was

the one which was recorded and used in the analysis. In addition, some hospitals procured medicines

through more than one method e.g. they would conduct an initial bidding process, but supply

medicines under a consignment system (see box) once those procured under the budget for bidding

Procurement by “consignment”

Certain public health facilities are authorized to use the consignment system under AO 5/2003 and AO 145/2004. Under these AOs, DOH hospitals may enter into contracts with licensed pharmaceutical suppliers or manufacturers under which the supplier provides the medicines to the hospital but retains ownership. Only upon the health facility dispensing or using the medicines is payment due to the supplier. The consignor should be the winning bidder of a prior public bid and should undertake to supply the medicines under consignment at the same (or lower) price. The advantages of this system, according to the AOs, are that:

o Availability of essential medicines should be increased at no increased public cost o Hospitals can earn funds through the sale of the medicines to be used in hospital operations o Funds otherwise allocated for procurement of medicines can be freed up for other uses o There should be increased competition with private retailers leading to lower prices o Red tape is reduced since funding is not through budgetary allotment o Waste is reduced since excess or expiring stock is simply returned to the supplier

21

were exhausted. Others operated a bidding process for medicines for charity patients (indigents) but

would procure as needed for paying patients using a revolving drug fund (RDF). These were dealt

with in the following manner:

� If a bidding price and a consignment (or other) price were available, the bid price was used

even in the consignment (or other) price was more recent;

� If no bid price was available, the consignment (or other) price was recorded and used.

As much as possible, information on the volume of procurement of each of the medicines was also

obtained to investigate the association between volume and price, taken either from Notices of Award

of bids or summing up volumes received from delivery notes or invoices. In practice, the quality of

this information varied, particularly at LGU level where access to Notices of Award was limited and

delivery notes/invoices were not always appropriately filed. Even when Notices of Award were

available, procurement was often not limited to the quantities stated in the Notice of Award. Given the

inaccurate and unreliable nature of this information, it has not been used in this report.

Semi-structured interviews were also conducted to obtain information on the procurement methods

and models used at the facility.

2.4 Data analysis

Background pharmaceutical policy information was gathered to assist in interpretation of the findings

of the study (Annex 1).

Procurement unit prices in PHP were entered into the Microsoft Excel workbook developed by

WHO/HAI for analysis of pricing survey data (available from

www.haiweb.org/medicineprices/manual/documents.html) using a double entry technique. For parallel

imported medicines procured by PITC Pharma, the 2007 average exchange rate from the ARIC

database of the Asian Development Bank [USD1 = PHP46.12] was used to change from USD to PHP

since all transactions occurred during 2007. However, because the standard workbook is not designed

for analysis of decentralised procurement data, further analysis was performed in a separate Excel

workbook.

Median price ratios: The data from the procurement price survey are not presented in actual

currency units (except as specific examples) but, rather, results are expressed as median price ratios

(MPRs) calculated using international reference prices. The median local unit price (e.g. median of all

data points available for a medicine within a procurement level) divided by the international reference

price (converted to local currency at the rate on the start day of the survey) provides the MPR:

MPR = median local unit price / reference unit price

The ratio is thus an expression of how much greater or less the local medicine price is than the

international reference price e.g. an MPR of 2 would mean that the local medicine price is twice that

of the international reference price. Median price ratios provide a means of interpreting the monetary

value and also facilitate cross-country comparisons of medicine price surveys. Since the international

reference prices represent actual prices offered in the international market, procurement of generic

medicines should be around MPR 1 or less to represent efficient procurement.

22

The reference prices used for calculation and presentation of the results were taken from the

Management Sciences for Health (MSH) International Drug Price Indicator Guide (2007) (MSH

2007), which are the medians of recent procurement or tender prices offered by for-profit and not-for-

profit suppliers to developing countries for multi-source (usually generic) products. The MSH

reference prices are therefore relatively low and represent efficient bulk procurement without the costs

of shipping or insurance.

For “average” summary values, the median rather than the mean was used due to the non-normal

distribution of some data (which is common with price data) and, to reduce the effect of extreme

values in the data. Variation or distribution of the data points are therefore presented as 1st and 3rd

quartiles meaning that 50% of all data points would fall between these values.

It should be noted that due to the relatively small sample (within each level of procurement) and poor

availability of many medicines, a MPR is reported and used in subsequent analysis even if only one or

two data points were present for an individual medicine. In some cases, the results which would be

obtained if MPRs were calculated only where at least four procurement prices were available for

medicines are also provided for comparison.

2.5 Ethical clearance and endorsement

The study was wholly funded by HAI Global and was endorsed by the Bureau of International Health

Cooperation (BIHC), the Office of the Secretary and the Pharmaceutical Management Unit (PMU-50)

of the Department of Health, Republic of the Philippines.

Individual endorsement was sought from hospital chief executives in the case of DOH-retained

hospitals. Endorsement was also sought from provincial governors and mayors for entry to LGU

facilities and access to their procurement prices. In no case was permission denied. However, requests

to obtain access to notice of awards of biddings was not always agreed to, particularly at provincial

level, since the endorsement letter and study proposal did not specify this, but rather specified access

to information at hospital level.

2.6 Confidentiality

Due to some concerns from some authorities about identification of their facilities or LGU, none of the

hospitals are identified by name in this report. They are rather identified by their level of procurement

and region of origin. In the case of PITC Pharma and the Botika ng Lalawigan of Oriental Mindoro

(BLOM), they would be immediately identifiable due to their unique nature. This was explained to

them before data collection and they are therefore referred to directly.

Since the international reference prices represent actual prices offered in the international

market, procurement of generic medicines should be around MPR 1 or less to represent

efficient procurement.

23

3. Results and Analysis

The results are analyzed and presented as both summary values, pooling the data for all medicines

and/or facilities as well as individually as indicated by the relevant subheadings. Note that reference to

municipal government and health facilities includes city government and health facilities. Thus, the

term ‘municipal hospital’ in the presentation of results includes city hospitals.

3.1 General

Important characteristics of the public hospitals and procurement facilities included in the survey are

shown in Table 7. As expected, DOH-retained hospitals tended to have larger expenditures on

medicines than provincial or municipal hospitals.

Bidding was commonly practiced although the frequency of bidding varied from annual to “as

needed” (performed quarterly or ad hoc more frequently, especially if performed by a GSO on behalf

of multiple facilities where the orders were not pooled). This could not be validated in all cases since

the study was performed at the level of the health facilities and the researchers did not generally have

access to the GSO offices or to bidding documents (and an audit of the procurement process was not

an objective of the study). At one municipal GSO it was observed that purchases were split so as to be

below PHP250,000 each – in which case shopping could be used for procurement instead of bidding.

The frequency of this practice or other practices, such as the abuse of “emergency purchases” to by-

pass bidding, could not be assessed.

Although 50 medicines were surveyed, there were some which were not procured by any of the

facilities and some which few facilities procured (Table 8). There were 20 procured by five or fewer

procurement entities and seven which were not procured by any of the facilities. Two of the reasons

for this were the focus of hospitals on providing medicines mostly for in-patient care in the face of

limited budgets and differences in prescribing habits in the Philippines compared with other countries

or international practice.

At public hospitals, ambulatory patients are generally expected to purchase their medicines from

private providers and the subsequent lack of availability of medicines for outpatients contributes

significantly to the fact that almost 90% of medicine purchases are made through retail pharmacies

and other non-hospital retail drug outlets (PHAP 2008). Exceptions to this rule were the Botika ng

Lalawigan (which runs its own retail outlet) and some hospitals that operated a revolving drug fund

(although the focus was still on in-patient care even with the latter).

3.2 Summary national procurement price MPR

Although the methodology was designed to examine prices at different levels of procurement, it is

possible to calculate an overall MPR for national procurement within DOH-retained, provincial and

municipal hospitals (including one non-DOH hospital and one Botika ng Lalawigan but excluding data

from PITC Pharma).

Bidding was commonly practiced although the frequency of bidding varied from annual to

“as needed”

24

Table 7. Characteristics of public hospital and procurement facilities surveyed

Region Type of

hospital/ facility

Procurement value 2008

(PHPmillion)1

Procurement entity

Main procurement method

Procurement notes and frequency

2

Pooled procurement mechanism

DOH-

retained

I General 50 Hospital National bidding, although not all used PhilGEPS. Shopping generally used for emergency procurements, usually from distributors rather than retail outlets or other hospitals. May procure from other hospitals in an emergency if a hospital-only item.

Annual No (although may use centralised procurement by CHD, COBAC or PITC). DOH-retained hospital in Region VI did procure for other public health facilities.

IV-A General 22 Hospital RDF; annual

IV-B - - - -

VI General 43 Hospital ‘Consignment’ used to supplement bidding; uncertain frequency

VII General 80 (excluding consigned medicines)

Hospital ‘Consignment’ used to supplement bidding; annual

NCR Specialist 90 Hospital RDF; annual

Provincial I Provincial NR Provincial GSO As per DOH-retained hospitals.

Uncertain frequency

GSO procures for the provincial, district and primary hospitals. Procurement may be pooled or done on an ‘as requested’ basis.

IV-A Provincial 32 Provincial GSO Bi- or triannual

IV-B Provincial 5 Botika ng Lalawigan/GSO

Bidding for supply by ‘consignment’.

Controlled drugs procured directly; biannual

VI (a) Provincial 1.2 DOH-retained hospital and provincial GSO

As per DOH-retained hospitals. District hospital in Region VI used funds provided by ILHZ to procure some medicines directly.

Uncertain frequency

VI (b) District 0.5 Provincial GSO/ hospital

Uncertain frequency

VII District 0.6 Provincial GSO Uncertain frequency

NCR - - - -

Municipal I Municipal hosp. & RHUs

NR Municipal GSO As per DOH-retained hospitals although one municipal GSO was observed to be splitting procurements to avoid bidding and use shopping instead.

Uncertain frequency

GSO procures for the municipal hospital, RHUs and BHSs. Procurement may be pooled or done on an ‘as requested’ basis (more common).

IV-A Municipal hosp. & RHUs

5 Municipal GSO Procure when needed

IV-B Municipal hosp. & RHUs

0.4 Municipal GSO Quarterly or as needed

VI - - - -

VII - - - -

NCR

(a)

Municipal hosp.

16 Municipal GSO Biannual

NCR

(b)

Municipal hosp.

17 Municipal GSO Annual

Provincial

pharmacy

(Botika ng

Lalawigan)

IV-B Botika ng Lalawigan

25 Botika ng Lalawigan/GSO

Bidding for supply by ‘consignment’.

Only ‘consignment’ used; RDF; biannual

BnLalawigan/GSO procures for the province and also supplies some municipal facilities and BnBs; retails to the public as well

Non-DOH

hospital

NCR General 150 Hospital As for DOH-retained hospitals.

RDF; biannual Also procures for clinics run by same authority

PITC NCR National procurement agency

NR PITC Pharma PDI through ‘consolidating agents’; national bidding for generics

Publicly funded (‘RDF’); annual or when needed

Procures on behalf of DOH, BnBayan, BnB

1Self-reported value for drugs and medicines at surveyed hospital only except in cases of municipality in Regions IV-A where RHU procurement was also included. Should be viewed with caution and only taken as a rough guide. 2Information obtained from pharmacy, not GSO, and not validated e.g. pharmacy may submit annual procurement plan to GSO, submit POs quarterly but GSO may do one bidding or multiple biddings when funds available or when POs submitted. Key: BHS – barangay health station; BnB – Botika ng Barangay; BnBayan – Botika ng Bayan; CHD – Center for Health Development; COBAC – Central Office Bids & Awards Committee; DOH - Department of Health; GSO – General Services Office; ILHZ – Inter Local Health Zone; NCR – National Capital Region; NR – not reported; PDI – parallel drug importation; PhilGEPS – Philippines Government Electronic Procurement System; PITC – Philippines International Trading Corporation; PO – purchase order; RDF – revolving drug fund; RHU – rural health unit

25

Table 8. List of medicines seldom procured by facilities* (procured by 5 or fewer in 2008)

Medicine #

facilities procuring

Comment

Acetylsalicylic acid 300 mg cap/tab 1 Mefenamic acid tablets/capsules preferred

Albendazole 200 mg cap/tab (non-chew)

0 Mebendazole products or albendazole 400mg tablets more common

Amitriptyline 25 mg cap/tab 0 Not in PNDF; imipramine, fluoxetine and sertraline are PNDF antidepressants although seldom procured

Atenolol 50 mg cap/tab 5 Metoprolol preferred

Atorvastatin 20 mg cap/tab 1 Not in PNDF; Simvastatin and pravastatin listed

Atropine 0.5 mg/mL 0 1 mg/mL strength preferred

Beclometasone inhaler 50 mcg/dose 0 Budesonide and fluticasone preferred; Beclometasone on complementary list of PNDF

Cephalexin 250 mg cap/tab 5 500mg strength preferred

Chloramphenicol 250 mg cap/tab 2 500mg strength preferred

Dexametasone 0.5 mg cap/tab 0 4mg strength preferred

Enalapril 10 mg cap/tab 4 Captopril preferred

Fluoxetine 20 mg cap/tab 2 Cost may be factor and seen as outpatient medicine

Hydrochlorothiazide 25 mg cap/tab 2 Not easily available on the market or commonly used

Imipramine 25 mg cap/tab 1 Only originator brand procured; cost may be factor and seen as outpatient medicine

Isosorbide dinitrate 10mg cap/tab 1 5mg strength sometimes procured

Metronidazole 250mg cap/tab 0 500mg strength preferred

Nifedipine Retard 20 mg tab 1 Short-acting forms or alternatives preferred

Paracetamol 24 mg/mL suspension 4 125mg/mL and 250mg/mL strength preferred

Salbutamol 100 mcg/dose inhaler 2 Nebulizer preferred

Salbutamol 5 mg/mL neb. solution 0 1mg/mL preferred

*Excludes PITC Pharma

26

Originator brands were on average procured at almost 16 times the reference price while

generic equivalents were on average procured at around 3 times the reference price

If this is done one obtains a summary MPR of 15.7 for originator brands and 2.9 for generic

equivalents (Table 9a) i.e. originator brands were on average procured at almost 16 times the reference

price while generic equivalents were on average procured at around 3 times the reference price. The

lowest median MPR observed was 0.9 while the maximum was 79.3 and half of all MPRs for generic

medicines were in the range 1.9 to 5.3.

Looking at individual medicine median MPRs, soluble insulin had the lowest MPR for both originator

brand and generic versions (see box). Amoxicillin suspension also featured as a low cost item relative

to international reference prices for both the originator brand and the generic. Conversely, fluoxetine

had the highest median MPR across all facilities for both originator and generic products.

Performing the calculation only where there were matching data for originator brands and generic

equivalents (Table 9a) and when at least four procurement prices were available for a medicine

provided comparable results (Table 9b) supporting the use of the summary variables. However, these

overall summary values should be interpreted with caution due to the potentially heterogeneous nature

of the data.

Medicines with lowest and highest unit prices relative to international prices

When pooling the data from all procurement entities (except PITC Pharma), the medicines with the lowest and highest median MPRs (lowest and highest unit prices relative to international reference prices) are shown below. Lowest prices

Originator brand1 Generic

Medicine Median unit

price (PHP) MPR Medicine

Median unit

price (PHP) MPR

Insulin soluble 37.0/mL 0.9 Insulin soluble 35.0/mL 0.9

Amoxicillin susp 0.81/mL 2.0 Cefuroxime 80.4 1.2

Amoxicillin 8.2 3.6 Cefazolin 77.3 1.4

Salbutamol inh 1.9/dose 4.4 Amoxicillin susp 0.57/mL 1.4 1 Atorvastatin excluded since single data point.

Highest prices

Originator brand Generic1

Medicine Median unit

price (PHP) MPR Medicine

Median unit

price (PHP) MPR

Omeprazole 80.0 38.4 Doxycycline 6.9 13.0

Metronidazole 500mg 18.8 58.1 Hydrochlorothiazide 3.0 22.6

Diclofenac 14.0 63.5 Diazepam 9.9 39.5

Fluoxetine 64.8 79.3 Fluoxetine 33.3 40.8

1Acetylsalicyclic acid excluded since single data point.

27

Table 9. Summary median price ratios (MPRs) for procurement calculated for facilities across all regions and level of procurement.1 (a) Calculated using all data points (when at least one procurement price was available)

MPR for medicines with 1 or more procurement price

All medicines Only matching pairs

Originator

brand (n=33)

Generic

(n=39)

Originator

brand (n=29)

Generic

(n=29)

Median MPR 15.7 2.9 16.7 2.9

Q1 4.9 1.9 4.9 1.8 Q3 33.3 5.3 33.3 4.9 Minimum 0.9 0.9 0.9 0.9 Maximum 79.3 40.8 79.3 40.8

(b) Calculated only where at least four procurement prices were available

MPR for medicines with 4 or more procurement prices

All medicines Only matching pairs

Originator

brand (n=2)

Generic

(n=32)

Originator

brand (n=1)

Generic

(n=1)

Median MPR 12.0 2.6 15.7 5.7

Q1 10.1 1.7 15.7 5.7 Q3 13.8 4.8 15.7 5.7 Minimum 8.3 0.9 15.7 5.7 Maximum 15.7 39.5 15.7 5.7

1Includes all hospitals and Botika ng Lalawigan but excludes PITC Pharma

Table 10. Summary MPRs for procurement prices analyzed by level of procurement

MPR for medicines with one or more procurement price

DOH-

retained (n=5)

Provincial (n=6)

Municipal (n=5)

Non-DOH (n=1)

Botika ng Lalawigan (n=1)

PITC Pharma (n=1)

OB

(n=9)

G

(n=32)

OB

(n=2)

G

(n=28)

OB

(n=0)

G

(n=31)

OB

(n=31)

G

(n=38)

OB

(n=5)

G

(n=28)

OB

(n=5)

G

(n=21)

Median 22.8 2.2 22.2 3.2 - 3.9 14.3 4.4 9.0 1.9 5.2 1.0

Q1 8.7 1.3 16.6 1.9 - 2.7 5.7 2.0 5.0 1.2 2.7 0.7

Q3 29.7 3.0 27.8 6.8 - 6.6 33.2 8.2 13.1 2.5 7.2 2.0

Min 5.1 0.5 11.1 1.0 - 0.8 0.9 0.7 1.4 0.3 1.0 0.6

Max 36.7 77.1 33.3 41.4 - 62.3 79.3 71.1 20.4 16.6 8.9 2.8

Key: OB – originator brand; G – generic

Note: Maximum and minimum values are the highest and lowest median MPRs and therefore the absolute values differ from those presented in Table 9 where the median is calculated across a larger number of data points. Taking generic furosemide as an example: the median MPR is 77.1, 3.2, 4.9, 39.9 and 2.9 for DOH-retained, provincial, municipal, non-DOH and BnL facilities respectively. The median MPR across all of the data points is 4.9 thus 77.1 is not the maximum MPR value for generics in Table 9.

28

3.3 Summary procurement price MPR by level of procurement

Table 10 and Figure 5 display the summary MPRs for the various levels of procurement.

For originator brand medicines, PITC Pharma performed best with its parallel drug importation

programme, although the parallel imported brands were still 5.2 times the international prices of

generic equivalents (also see section 3.1.9). The Botika ng Lalawigan procured originator brands at 9

times the reference prices on average while other procurement entities performed worse with median

MPRs ranging from 14.3 to 22.8. Municipal hospitals were not found to procure any originator brands

of the medicines being surveyed.

With regard to generic medicines, PITC Pharma again performed best across the range of medicines,

procuring at around the international reference price (although procurement prices could be as high as

2.8 times the reference price; see section 3.1.9). Other procurement entities procured generic products

at around 1.9 to 3.9 times the reference price.

DOH-retained hospitals tended to be more efficient at procuring generic medicines than provincial

hospitals and the latter more efficient than municipal hospitals (as measured by MPRs) (Figure 5 and

Figure 6) although there were variations when considering individual hospital data (see Table 11). The

non-DOH hospital performed particularly badly (median MPR 4.4). While this facility did procure

‘branded-generics’, it had a policy of having multiple generics available to cover their range of

patients and so usually stocked a cheaper generic for each ‘branded-generic’ (and the price of the

cheapest generic available was recorded in data collection).

Figure 5. Median procurement MPR (and interquartile range) for generic medicines

across the various levels of procurement

DOH-retained hospital were more efficient at procurement than provincial hospitals and

the latter more efficient than municipal hospitals

Summary procurement prices (median MPR and interquartile range) across the various levels of

procurement

0

1

2

3

4

5

6

7

8

9

DOH (n=5) Provincial (n=6) Municipal (n=5) Non-DOH (n=1) BnL (n=1) PITC (n=1)

Med

ian

pri

ce r

ati

o (

MP

R)

29

Figure 6. Comparison of procurement prices for selected generic medicines at DOH-retained, provincial and municipal hospitals

There was substantial variability in the summary median MPR for generic medicine procurement at

provincial and municipal hospitals, and the non-DOH hospital (Figure 5). For the former two cases

this indicates that there are substantial differences in the performance of individual procurement

entities within these levels of local government. At the non-DOH hospital the reason is less clear –

since this applies to a single entity it indicates that some generics are procured at greater efficiency

than others.

Further analysis in this report concentrates on the procurement of generic medicines, except where

otherwise stated.

3.4 Individual hospital procurement MPRs by level of

procurement

The variation in the individual facility’s level of procurement of generic medicines was examined for

DOH-retained, provincial and municipal hospitals (Table 11; Figure 7).

DOH-retained hospitals: Across the five hospitals, median MPRs varied from 1.1 (Region VII) to 3.7

(Region IV-A) i.e. prices varied from 1.1 to 3.7 times the reference price. This is a relatively small

variation compared to that seen for provincial and municipal hospitals.

Provincial/district hospitals: Median MPRs for procurement of generics varied from 0.7 (Region

VII; only three data points) to 5.5 (Region IV-A).

Municipal hospitals: On average, procurement prices for generics ranged from 2.6 (Region IV-B) to

9.3 (Region IV-A).

Comparison of procurement prices (as MPRs) for generic medicines from DOH-retained, provincial

and municipal hospitals.

0

2

4

6

8

10

12

14

Co-

trim

oxaz

ole

tabs

Cef

triax

one

inj

Glib

enclam

ide

Simva

stat

in

Ran

itidine

Cip

roflo

xacin

Cef

azolin

Amox

icilli

n+clav

.

Cot

rimox

azole

tabs

DS

Cap

topr

il

Met

form

in

Amox

icilli

n su

sp.

MP

R

DOH-retained Provincial Municipal

30

Apart from the DOH-retained hospital and provincial hospital in Region VII, procurement cannot be

described as efficient (MPR ≤ 1). What is important to note from the results of these two centers is that

it is possible to obtain low cost generics through public bidding. It is clear from some of the other

hospitals that there are gross inefficiencies, some of which may be the effects of corruption in the

procurement process. Region IV-A showed the worst procurement efficiency at each level.

There is variability within each procurement level making it difficult to definitively conclude that

DOH-hospital procurement is more efficient than provincial procurement. For example, procurement

efficiency at the DOH hospital in NCR appears worse than some provincial entities. This variability

suggests that there are factors other than structural differences between each procurement level which

influence procurement efficiency. While vulnerability to corruption may be one of these, other

specific factors could also be responsible such as the use of revolving funds to support purchases of

medicines. Since the cost is recouped by charging patients there is less incentive to ensure low

procurement prices.

3.5 Individual hospital procurement MPRs by region

The data in the preceding section suggest that there may be regional differences in procurement

efficiency. Region IV-A had the highest MPR for DOH, provincial and municipal hospitals, and

Region VII the lowest in two cases (no DOH-retained hospital surveyed in Region VII). Table 12 and

Figure 7 allow further examination of this. While definitive conclusions cannot be drawn due to the

small number of facilities surveyed within a given region, there is some indication of regional

difference, with NCR and Region IV-A having the highest MPRs. The extreme variations seen in the

two worst performing procurement entities (provincial hospital – Region IV-A; municipal hospital –

Region IV-A) suggest that there are factors beyond the procurement process which are leading to high

prices at these facilities which require further investigation (this may be the influence of corruption

affecting the supply of certain medicines but there may be other explanations).

Given that NCR is the main port of entry and base for the majority of manufacturers and distributors,

and Region IV-A is the neighbouring region to the south of NCR, these observed differences are not

likely to be due to supply chain logistics. Procurement methods, procurement process efficiencies,

hospital characteristics and possibly corruption are more likely reasons.

3.6 Variability in procurement prices of individual

medicines

Thus far, the data have been presented as a summary variable, the median MPR across all medicines

present at a facility. However, there is value in looking at the procurement prices of individual

There is some indication of regional difference with NCR and Region IV-A having the

highest MPRs…Procurement methods, procurement process efficiencies, hospital

characteristics and possibly corruption are…likely reasons

It is possible to obtain low-priced generics through public bidding

31

medicines (both as MPR and actual value) to gain further understanding of the challenges in the

market and the procurement of medicines in the public sector.

There was considerable variability in the prices which facilities paid to procure individual medicines

(Table 13). Of the 39 medicines where a generic had been procured, in 14 cases at least one facility

had managed to procure the medicine at or below the reference price i.e. MPR ≤ 1.

32

Table 11. Variation in procurement prices (as MPRs) of generics between regions for the same levels of procurement

MPR for medicines with one or more procurement prices

DOH-retained hospital Provincial hospital Municipal hospital

Region IV-A† NCR

† VI I VII IV-A VI

‡ VI I IV-B VII

‡ IV-A I NCR NCR IV-B

(n=19) (n=18) (n=20) (n=24) (n=23) (n=21) (n=12) (n=14) (n=12) (n=18) (n=3) (n=20) (n=10) (n=9) (n=21) (n=12)

Median 3.7 2.1 2.0 1.8 1.1 5.5 2.9 2.8 2.1 2.1 0.7 9.3 5.1 4.3 3.1 2.6

Q1 2.7 1.5 1.2 1.1 0.8 4.0 1.5 1.4 1.3 1.3 0.6 4.6 4.5 2.2 2.2 1.5

Q3 5.9 4.2 2.5 2.8 1.7 15.3 4.4 4.2 4.1 3.2 1.4 14.2 6.1 5.3 3.9 3.2

Min 0.9 0.4 0.5 0.5 0.3 2.3 0.7 1.0 0.8 0.5 0.5 2.8 2.3 1.3 0.8 0.9

Max 77.1 73.2 36.7 13.0 4.8 72.5 43.3 39.5 19.5 13.0 2.1 36.3 15.2 6.3 62.3 13.3

†Hospital operates a revolving fund for the purchase of medicines

‡District hospital under provincial government and using provincial procurement mechanisms

Table 12. Variation in procurement prices (as MPRs) of generic medicines between different levels of procurement within a region

MPR for medicines with one or more procurement prices

Region I NCR IV-A IV-B VI VII

Mun. Prov. DOH Mun. Mun. DOH† Mun. Prov. DOH

† Mun. Prov. Prov.

‡ Prov. DOH DOH Prov

‡

(n=10) (n=12) (n=24) (n=9) (n=21) (n=18) (n=20) (n=21) (n=19) (n=12) (n=18) (n=12) (n=14) (n=20) (n=23) (n=3)

Median 5.1 2.1 1.8 4.3 3.1 2.1 9.3 5.5 3.7 2.6 2.1 2.9 2.8 2.0 1.1 0.7

Q1 4.5 1.3 1.1 2.2 2.2 1.5 4.6 4.0 2.7 1.5 1.3 1.5 1.4 1.2 0.8 0.6

Q3 6.1 4.1 2.8 5.3 3.9 4.2 14.2 15.3 5.9 3.2 3.2 4.4 4.2 2.5 1.7 1.4

Min 2.3 0.8 0.5 1.3 0.8 0.4 2.8 2.3 0.9 0.9 0.5 0.7 1.0 0.5 0.3 0.5

Max 15.2 19.5 13.0 6.3 62.3 73.2 36.3 72.5 77.1 13.3 13.0 43.3 39.5 36.7 4.8 2.1

Key: Prov. – provincial; Mun. – municipal †Hospital operates a revolving fund for the purchase of medicines

‡District hospital under provincial government and using provincial procurement mechanisms

33

Figure 7. Median MPRs (and interquartile range) for procurement of generic medicines by individual hospitals and procurement entities

The lowest observed MPR was 0.3 for gliclazide tablets (Botika ng Lalawigan Region IV-B) and

cefuroxime injection (DOH-retained hospital Region VII). However, in no cases did all facilities

procure a medicine below MPR 1 with the lowest “maximum MPR” i.e. the lowest high price, being at

least 2.8 times the reference price (regular insulin; provincial hospital Region IV-A) and up to 77

times the reference price (furosemide tablets; DOH-retained hospital Region IV-A). It was surprising

that some very common and long-registered products for which multiple generic versions exist in the

Philippines were procured at more than the reference price by all facilities e.g. cotrimoxazole

(400mg+80mg) tablets, glibenclamide.

Figure 8 and Figure 9 provide the average procurement prices (as MPR) of generic medicines

summarised by level of procurement i.e. at DOH-retained, provincial and municipal hospitals. The

former set of charts shows the medicines with the ten highest MPRs at each level, while the second set

of figures gives a wider selection of the medicines procured. Diazepam is seen to be procured at 37 to

62 times the international reference price. Even allowing for shipping, insurance and higher mark-ups

related to additional measures needed for controlled drugs, and possibly fewer suitably registered

distributors, this is exorbitant. In fact, one DOH-retained hospital was procuring originator brand

diazepam at the same price as generic diazepam was being purchased by another DOH-retained

facility (unit cost PHP 9.15/tablet; MPR 36.7) and cheaper than some other provincial and municipal

centers (the brand status was reconfirmed by contacting facilities due to the anomalous nature of the

data). This suggests the presence of price gouging (excessive pricing) and/or collusion by distributors

which is possibly exacerbated by inefficient and/or corrupt procurement processes and the lack of

price information sharing between levels of procurement (reducing bargaining power).

Individual procurement entities median MPRs (and IQR) for procurement of generic medicines

0

2

4

6

8

10

I NCR IV-A VI VII I IV-A IV-B VIa VIb VII I NCRa NCRb IV-A IV-B NCR IV-B NCR

DOH Provincial Municipal Non-

DOH

BnL PITC

Med

ian

MP

R

15.3 14.2

One DOH-retained hospital was procuring originator brand diazepam at the same price

as generic diazepam was being purchased by another DOH-retained facility

34

Table 13. Individual procurement median price ratios (MPRs) for generic medicines showing the degree of price variation and number of facilities procuring the medicine at an MPR of value 1 or lower (excludes PITC Pharma data)

Medicine Name Min MPR

Max MPR

Median MPR

Variation

min

max

Percent difference

100]min

min][max[ x

−

Type of facility with lowest

MPR (Region)

# with MPR ≤ 1 (# with data)

1

Ciprofloxacin 0.7 33.1 5.0 46.2 4,524 Prov/Dist (VII) 3 (17)

Doxycycline 1.7 73.2 13.0 43.4 4,244 DOH (VII) 0 (11)

Cotrimoxazole tabs DS 1.1 40 1.7 36.8 3,583 Prov (I) 0 (13)

Ceftriaxone injection 0.6 19.1 3.4 32.7 3,170 DOH (VII) 3 (14)

Furosemide tablet 2.9 77.1 4.9 26.4 2,540 BnL (IV-B) 0 (6)

Cefazolin 0.4 7.8 1.4 20.1 1,914 DOH (VII) 4 (12)

Diclofenac 4.0 72.5 6.0 18.1 1,713 BnL (IV-B) 0 (7)

Glibenclamide 2.3 33.3 4.9 14.4 1,341 BnL (IV-B) 0 (10)

Ranitidine 1.1 14.1 4.4 12.3 1,134 DOH (VII) 0 (14)

Cefuroxime 0.3 4.1 1.2 12.2 1,121 DOH (VII) 6 (14)

Salbutamol syrup 0.8 9.9 1.9 11.8 1,084 Mun (NCR) 3 (10)

Methylergometrine 1.8 19.5 5.4 10.9 987 DOH (VI) 0 (9)

Gliclazide 0.3 3.2 1.8 10.8 983 BnL (IV-B) 2 (10)

Metronidazole 500mg 2.0 21.7 2.8 10.6 961 DOH (VII) 0 (11)

Omeprazole 1.6 16.6 4.8 10.4 938 DOH (VII) 0 (9)

Co-trimoxazole tablets 1.7 15.2 3.3 8.8 785 DOH (VII) 0 (10)

Metformin 0.7 6.2 1.7 8.7 773 DOH (VII) 2 (13)

Chloramphenicol caps 1.4 11.8 - 8.5 750 BnL (IV-B) 0 (2)

Amoxicillin 0.7 4.8 1.7 7.3 627 Prov (VI) 3 (17)

Cephalexin 0.6 4.4 2.3 7.1 611 BnL (IV-B) 1 (5)

Simvastatin 1.4 10.1 2.6 7.1 614 DOH (VII) 0 (9)

Diazepam 9.4 62.3 39.5 6.6 562 Non-DOH (NCR) 0 (5)

Ibuprofen 2.3 13.7 2.7 6.0 502 Prov (IV-B) 0 (5)

Co-trimoxazole susp 1.2 7.2 1.7 5.9 494 Mun (NCR) 0 (6)

Captopril 1.6 9.3 2.2 5.8 481 DOH (VII) 0 (14)

Chloramphenicol susp 1.1 6.2 1.5 5.5 446 DOH (VII) 0 (7)

Metronidazole susp 1.0 5.3 2.2 5.4 443 Prov (VI) 1 (9)

Paracetamol susp 1.0 5.1 2.6 5.3 426 Prov (VI) 1 (4)

Amoxicillin+clavulanate2 0.9 4.8 2.9 5.1 411 DOH (VII) 1 (12)

Amoxicillin susp 1.0 4.9 1.4 5.0 398 DOH (VII) 1 (13)

Insulin soluble rDNA 0.7 2.8 0.9 4.1 312 Non-DOH (NCR) 3 (5)

Amlodipine 3.7 13.3 5.7 3.6 259 DOH (I) 0 (6)

Atenolol 2.5 5.3 2.9 2.1 111 DOH (VII) 0 (4)

Enalapril 6.7 12.0 7.1 1.8 81 DOH (I) 0 (3)

Salbutamol inhaler 2.8 3.2 - 1.2 17 Non-DOH (NCR) 0 (2)

Isosorbide dinitrate 4.4 4.4 - 1.0 - Non-DOH (NCR) 0 (1)

Acetylsalicylic acid 13.3 13.3 - 1.0 - Mun (IV-B) 0 (1)

Hydrochlorothiazide 22.6 22.6 - 1.0 - Non-DOH (NCR) 0 (1)

Fluoxetine 40.8 40.8 - 1.0 - Non-DOH (NCR) 0 (1)

1 This column refers to the number of facilities which procured the medicine and the number which procured it at or below the international reference price (MPR ≤ 1). Median MPR only calculated when at least three facilities procured the item. 2 Co-amoxiclav

Key: DOH = DOH-retained hospital; Prov = provincial hospital; Prov/Dist = District hospital procuring through provincial office; Mun = municipal hospital; BnL = Botika ng Lalawigan

35

Figure 8. Top ten procurement prices (as MPR) at (a) DOH-retained, (b) provincial and (c) municipal hospitals

a) DOH-retained

b) Provincial

c) Municipal

Top ten procurement prices of generic medicines at DOH-retained hospitals

0

5

10

15

20

25

30

35

40

45

Furos

emid

e ta

blet

Dia

zepa

m

Dox

icyc

line

Ena

lapr

il

Amlodi

pine

Cep

halexin

Salbu

tam

ol in

hale

r

Par

acet

amol

sus

pens

ion

Met

roni

dazo

le 5

00m

g

Glib

enclam

ide

Med

ian

pri

ce

rati

o (

MP

R)

77.1

Top ten procurement prices of generic medicines at provincial hospitals

0

5

10

15

20

25

30

35

40

45

Dia

zepa

m

Diclo

fena

c

Dox

icyc

line

Amlo

dipi

ne

Met

hylerg

omet

rine

Simva

stat

in

Glib

enclam

ide

Ran

itidi

ne

Cip

roflo

xacin

Om

epra

zole

Me

dia

n p

ric

e r

ati

o (

MP

R)

Top ten procurement prices of generic medicines at municipal hospitals

0

5

10

15

20

25

30

35

40

45

Dia

zepa

m

Co-

trim

oxaz

ole

tabl

ets

Amlodi

pine

Acetylsal

icylic a

cid

Cef

triax

one

inje

ction

Glib

enclam

ide

Diclo

fena

c

Simva

stat

in

Ran

itidi

ne

Met

hylerg

omet

rine

Me

dia

n p

ric

e r

ati

o (

MP

R)

62.3

36

Figure 9. Procurement prices (as MPR) of selected generic essential medicines at (a) DOH-retained, (b) provincial and (c) municipal hospitals

a) DOH-retained

b) Provincial

c) Municipal

Procurement MPRs for selected generic medicines at DHO-retained hospitals

0

1

2

3

4

5

6

7

8

9

10

Diaze

pam

Dox

icyc

line

Amlodipine

Glib

enclam

ide

Ran

itidine

Sim

vastat

in

Cap

topr

il

Am

oxicilli

n su

sp.

Salbu

tam

ol syr

up

Co-

trim

oxaz

ole

susp

.

Met

form

in

Cef

triax

one

injection

Insu

lin solub

le rD

NA

Cef

azolin

Me

dia

n M

PR

36.7 22.2

Procurement MPRs for selected generic medicines at provincial hospitals

0

5

10

15

20

Diaze

pam

Dox

icyc

line

Amlodipine

Simva

stat

in

Glib

enclam

ide

Ran

itidine

Cef

triax

one

inj.

Cap

topr

il

Insu

lin solub

le rD

NA

Met

form

in

Cef

azolin

Amox

icilli

n su

sp.

Cot

rimox

azole

tabs

DS

Me

dia

n M

PR

41.4 20.0

Procurement MPRs for selected generic medicines at municipal hospitals

0

2

4

6

8

10

12

14

Diaze

pam

Am

lodipine

Cef

triax

one

inj.

Glib

enclam

ide

Simva

stat

in

Ran

itidine

Cef

azolin

Cot

rimox

azole

DS

Cap

topr

il

Met

form

in

Dox

icyc

line

Amox

icillin sus

p.

Insu

lin solub

le rD

NA

Salbu

tam

ol syr

up

Med

ian

MP

R

62.3

37

It is interesting to note that while, in general, municipal facilities perform less efficiently in

procurement than the other levels, this was not always the case. For example, DOH-retained and

provincial hospitals were procuring doxycycline at 20 times the reference price on average, whereas

municipalities were procuring it at MPR 2.8 (Figure 9). This could reflect differences between

‘branded-generic’ and low cost generic versions of this medicine although this was not confirmed.

3.6.1 Variations in prices of generic medicines between and within hospitals Further understanding of the variability present in procurement prices can be elicited by looking at the

data from the individual hospital level (rather than using summary median MPRs).

The variability in procurement price (MPR) of selected generic medicines is shown in Figure 10 for

individual hospitals within each level of procurement. It is clear that for some medicines there

consistently exists substantial variation e.g. ciprofloxacin, ceftriaxone. For other medicines, the picture

is not as clear with limited variation in the price of metformin and amoxicillin suspension at DOH-

retained hospitals but substantial variation for these products at municipal level (see box).

This confirms the data from Figure 10 that there is at least one facility in each level of government

procuring the medicine at close to the international price while there are others procuring the same

item for more than 2 to 6 times the international price, with municipal facilities performing the worst.

a) Variability between hospitals Table 14 provides further examples of differences in procurement prices for selected generic

medicines at each procurement level. It can be seen that there were substantial differences in the price

for a particular medicine within each level of procurement and across levels. There was essentially no

sharing of price information between hospitals either within a procurement level (DOH, provincial, or

municipal) or between levels such that, except in certain cases where high prices were assumed by

staff due to alleged corrupt practices, staff had little idea whether their procurement prices were ‘good’

or ‘bad’ compared to other facilities or procurement entities.

There were substantial differences in the price for a particular medicine within each level

of procurement and across levels

Minimum and maximum procurement prices and MPRs for generic amoxicillin 250mg/5mL suspension and metformin 500mg

tablets at DOH-retained, provincial and municipal hospitals.

Unit price (PHP) Median MPR

Medicine Min Max Min Max

DOH Amoxicillin susp.1 24.6 58.8 1.0 2.4 Metformin 0.6 2.4 0.7 2.8

Provincial Amoxicillin susp.1 27.6 38.4 1.1 1.6

Metformin 1.0 2.0 1.1 2.3

Municipal Amoxicillin susp. 1 29.4 121.8 1.2 4.9 Metformin 1.1 5.5 1.3 6.2

1Peso price shown for 60mL bottle; MPR calculated using price/mL

38

Figure 10. Variation in procurement MPR for selected generic medicines at (a) DOH-retained, (b) provincial and (c) municipal hospitals

a) DOH-retained

b) Provincial

c) Municipal

Variation in procurement price (MPR) for generic medicines at DOH-retained hospitals in various

regions

0

5

10

15

20

25

Omeprazole Ceftriaxone inj. Ciprofloxacin Amoxicillin+clav. Metformin Captopril Amoxicillin susp.

Med

ian

pri

ce r

ati

o (

MP

R)

I NCR IV-A VI VII

33.1

Variation in procurement prices (MPR) for generic medicines across provincial and district hospitals

in various regions

0

5

10

15

20

25

Ceftriaxone

injection

Methylergometrine Ciprofloxacin Metronidazole

500mg

Cefuroxime Amoxicillin

Med

ian

pri

ce

rati

o (

MP

R)

I IV-A IV-B VI VI VII

Variation in procurement prices (MPR) of generic medicines at municipal hospitals across various

regions

0

5

10

15

20

25

Ciprofloxacin Ranitidine Cotrimoxazole

tabs DS

Captopril Metformin Amoxicillin Amoxicillin susp.

Med

ian

pri

ce

rati

o (

MP

R)

I NCRa NCRb IV-A IV-B

39

Table 14. Variations in procurement prices (in Pesos) of selected generic medicines between hospitals and other procurement entities

Region Procurement price (PHP)

Amoxicillin 500mg tab/cap

Co-amoxiclav 625mg tab/cap

Ciprofloxacin 500mg tab/cap

Ranitidine 150mg tab/cap

DOH-

retained

hospitals

I 2.5 23.2 1.5 -

NCR 4.8 49.9 1.6 5.0

IV-A 4.5 45.0 8.7 4.3

VI 2.8 30.4 51.8 2.3

VII 1.8 13.2 1.2 1.3

Provincial/

district

hospitals

I 4.5 - 7.9 1.6

IV-A 7.1 57.1 18.0 16.2

IV-B 2.9 - 2.9 -

VI 1.5 42.4 29.3 8.0

VI 6.5 40.0 7.0 5.7

VII - - 1.1 -

Municipal

hospitals/

RHUs

I 10.9 - - 10.0

NCR 5.0 9.8 5.0

NCR 3.0 67.5 4.8 4.0

IV-A 9.4 58.0 33.0 14.0

IV-B 2.1 - 4.6 -

Non-DOH

hospital NCR 4.0 24.0 8.0 5.0

Botika ng

Lalawigan IV-B 2.6 27.9 26.0 2.7

PITC

Pharma NCR 1.3 33.3 1.4 0.7

Ignoring which level procurement took place at and including just hospital data i.e. excluding data

from the Botika ng Lalawigan and PITC Pharma, the maximum procurement price was on average

(mean) 10.5 times greater than the minimum price (a difference of 952%) (Table 15). The greatest

variation was seen with ciprofloxacin (46.2 times; 4524%). In some cases, particularly the injectable

products, these differences reflect the difference in price between low cost generics and the ‘branded-

generics’ on the Philippine market (some of which were being priced at or just below the price level of

the originator brand), but even these do not account for the wide variation seen. This is evident when

one considers the variation in prices of the same item within a hospital, even allowing for price

differences between suppliers (see next section).

Although the data sources did not always permit identification of when a price referred to a ‘branded-generic’, Table 16 presents some examples when this information was available.

The maximum procurement price was on average 10.5 times greater than the minimum

price (a difference of 952%)

40

Table 15. Procurement prices of the ten generic medicines showing the highest variation in price (excluding Botika ng Lalawigan and PITC Pharma data)

Medicine n Min MPR

Max MPR

Min unit price (PHP)

Max unit price (PHP)

Variation†

min

max % difference†

100]min

min][max[ x

−

Ciprofloxacin 16 0.7 33.1 1.1 51.8 46.2 4524

Doxycycline 10 1.7 73.2 0.9 38.7 43.4 4244

Co-trimoxazole DS1 12 1.1 40.0 1.0 36.0 36.8 3583

Ceftriaxone inj. 13 0.6 19.1 25.8 843.0 32.7 3170

Furosemide 5 3.2 77.1 0.7 15.8 23.9 2287

Cefazolin inj. 11 0.4 7.8 22.1 445.0 20.1 1914

Diclofenac 6 4.1 72.5 0.9 16.0 17.7 1673

Glibenclamide 9 2.4 33.3 0.5 6.2 13.8 1277

Ranitidine 13 1.1 14.1 1.3 16.2 12.3 1134

Cefuroxime inj. 13 0.3 3.7 22.0 268.4 12.2 1121

†Calculations based on actual values, not rounded numbers in table giving rise to minor differences. 1DS=double strength (800mg+160mg)

Table 16. Examples of the difference in price between low cost generic and ‘branded-generic’ versions procured within the same hospital

Facility #

Medicine Lowest priced

generic unit price (PHP)

Branded generic unit price (PHP)

Other unit price (PHP)

1 Cefazolin 1g/mL inj. 86 125 -

Ceftriaxone 1g/mL inj. 88 236 -

Cefuroxime 750mg/mL inj. 88 115 -

2 Cefuroxime 750mg/mL inj. 22 349 100 (other generic)

Omeprazole 20mg cap/tab 8 51 -

3 Ceftriaxone 1g/mL inj. 28 495 850 (originator)

Cefuroxime 750mg/mL inj. 23 260 -

b) Variability within hospitals for the same item

Substantial and often extreme variation was sometime noted for the same medicine in sequential

procurements when data was made available by facilities. Although this was not part of the objectives

of this survey, Table 17 provides some examples which were observed. What is evident is that the

small size of some procurement requests (which may be for a quarter of the financial year and may be

for a single hospital/RHU or the result of a pooled bid) as well as a lack of any association between

price and volume (although these are usually different products supplied from different winning

bidders). One must bear in mind the relatively small contribution of the public sector to the

pharmaceutical market (in terms of sales) which will affect the influence which can be brought in price

negotiations (Figure 4).

Substantial and often extreme variation was sometime noted for the same medicine in

sequential procurements

41

Table 17. Examples of differences in procurement prices for the same item within the same hospital

Type of facility

Medicine Procurement unit price 1

(PHP)

Volume 1 (no. of units)

Procurement unit price 2

(PHP)

Volume 2 (no. of units)

DOH1 Ciprofloxacin 27.0 - 8.7 -

Ranitidine 4.3 4,000 6.9 600

DOH Metformin 1.9 3,000 4.4 1,000

Provincial Ciprofloxacin 7.9 1,000 1.6 1,150

Amoxicillin 4.5 500 2.3 2,500

Municipal2 Aspirin 3.0 1,100 1.5 3,000

Ciprofloxacin 2.5 400 4.6 200

Glibenclamide 0.6 5,000 1.5 7,000

Municipal Amoxicillin 10.9 1,700 4.5 800

Captopril 3.5 500 15.0 500

Ranitidine 28.3 2,400 10.0 60

1Bids took place in subsequent years (2007 and 2008) 2Procurement performed through shopping (canvassing)

3.7 Revolving drug funds (RDFs)

As noted in Table 7, two DOH-retained hospitals, the Botika ng Lalawigan (BLOM) and the non-

DOH hospital operated using revolving funds whereby earnings from the sales of medicines was

retained and used to fund future purchases (and pay for overheads and staff salaries in the case of

Botika ng Lalawigan and the non-DOH hospital). The data in Table 11 suggested that these entities

may be exhibiting less efficient procurement, which warrants further examination although the dataset

is very limited.

Comparing them to the other DOH-retained hospitals (Table 18), the facilities operating RDFs appear

to be procuring more originator brand products than those without (there is insufficient data to say

whether they procure them at better prices or not). The non-DOH hospital in particular procured many

originator brands.

Table 18. Comparison of facilities with revolving drug funds to DOH-retained hospitals not operating revolving funds

DOH-retained Non-DOH BnL

I NCR IV-A VI VII NCR IV-B

RDF present � � � � � � �

No. of OB procured 3 7 1 1 0 31 5

OB median MPR 29.8 19.2 8.3 8.3 - 14.3 9.0

No. of generics procured 24 18 19 20 23 38 28

Generic median MPR 1.8 2.1 3.7 2.0 1.1 4.4 1.9

The facilities operating RDFs appear to be procuring more originator brand products

than those without … on average the RDF facilities procured the generics at higher prices

than non-RDF DOH-hospitals

42

The RDF DOH-retained hospitals were procuring slightly fewer generics than the other DOH-retained

hospitals although the differences were not marked. The non-DOH hospitals and Botika ng Lalawigan

however procured more generic medicines than the DOH-retained hospitals and, in this regard it could

be argued that RDFs do lead to a wider range of essential medicines being ‘available’, which was the

view of the pharmacists managing the facilities. Actual availability was not assessed in this survey i.e.

whether the medicines were available on the shelf of the pharmacy or number of days out of stock. Of

concern, however, was that on average the RDF facilities procured the generics at higher prices than

non-RDF DOH-hospitals.

It should be noted that the Botika ng Lalawigan (BnL) was procuring on behalf of a provincial LGU.

On average, it was procuring both generic and originator brand medicines at lower prices than the

other provincial hospitals combined (Table 10). However, this overall impression ignores the

variability present within provincial level procurement (Table 11) – one provincial hospital procured

at lower prices on average than the BnL while two had similar prices (one of which obtained its

medicines from the BnL and so should be ignored in this instance). Therefore, it is not clear that

procuring entirely by consignment (companies bid to be consignors) as is practiced at this BnL, is a

better proposition than performing efficient public bidding.

One of the main arguments for RDFs is that they can provide a sustainable and regular source of

funding for medicines thus increasing availability. However, since the facilities (in the presented

cases) charge a flat percentage mark-up, the higher the cost of the medicine, the more money the fund

generates creating an incentive for higher prices and procurement of originator brand medicines. The

data provide some support for this theoretical framework, but more study specifically designed to

assess the impact of RDFs would be required to confirm this.

3.8 P100 project

The selling prices for medicines under the P100 project were converted to MPRs by dividing them

with the corresponding international reference prices and these compared to the PITC procurement

price and the lowest procurement MPR from the hospital procurements (Table 19). The eleven P100

medicines generated a summary MPR of 2.2 (IQR 1.3 – 2.9) i.e. on average, they were 2.2 times the

international reference price.

Bearing in mind that these are selling prices that incorporate the costs of bidding, distribution,

repacking in P100 packages and mark-ups (of the local distributor and of PITC Pharma), one would

expect the prices to be somewhat higher (exactly how much is debatable but 30-50% might be

reasonable) than the international reference price or the low local procurement prices. However, it is

clear that some local hospitals are able to procure these medicines at much lower cost than the P100

selling prices suggesting that PITC Pharma could be more efficient in its local procurement of these

medicines and/or could reduce its mark-ups on some products (note that the PITC procurement prices

do not necessarily correspond to the stock used to supply P100 medicines). It could be argued that

PITC Pharma procures at higher prices to ensure they procure quality products - while all products

procured by public hospitals are required to be registered by BFAD BFAD does not stringently apply

Good Manufacturing Standards on local manufacturers (36 of 62 licensed prescription medicine

manufacturers have a current GMP certificate; Kanavos 2002; Tisocki 2009).

43

3.9 PITC Pharma parallel drug imports

Some limited data was available on parallel drug imported originator brand medicines by the

Philippines International Trading Corporation pharmaceutical division (PITC Pharma). These were

converted to MPRs and compared to the lowest procurement price available for the corresponding

medicine from the surveyed facilities (Table 20). The parallel imports were available at much lower

prices than the local originator brands that were being procured by health facilities.

Table 19. Comparison of P100 Project medicine prices (as MPRs) to the lowest corresponding procurement price from survey hospitals

Unit cost (PHP) Median price ratio

Medicine P100 PITC Pharma

Lowest procuremen

t price

P100 PITC Pharma

MPR

Lowest procureme

nt MPR Amlodipine 7.9 - 5.0 5.9 - 3.7

Amoxicillin 2.8 1.3 1.5 1.2 0.6 0.7

Atenolol 3.9 - 2.0 4.9 - 2.6

Ciprofloxacin 1.8 1.4 1.1 1.1 0.9 0.7

Co-trimoxazole DS 1.3 0.9 1.0 1.4 1.0 1.1

Glibenclamide 0.6 0.3 0.5 3.0 1.8 2.4

Metformin 0.9 0.6 0.6 1.0 0.7 0.7

Metronidazole 500mg 1.0 0.9 0.7 2.9 2.8 2.0

Omeprazole 4.5 2.5 3.3 2.2 1.2 1.6

Ranitidine 2.3 0.7 1.3 2.0 0.6 1.1

Simvastatin 5.2 4.1 2.8 2.6 2.1 1.4

Table 20. Comparison of PITC Pharma parallel drug imported originator brand prices with those of the lowest procurement price at surveyed facilities

(a) Compared to originator brands procured at surveyed hospitals

PITC (originator brand) Surveyed hospitals (originator brand) Medicine

(originator brand)

Procurement unit price

(PHP)

Procurement MPR

Lowest procurement unit

price (PHP)

Lowest procurement

MPR

Source of MPR

Amlodipine (Norvasc®)

12.0 8.9 17.6 13.1 BnL

Captopril (Capoten®)

6.7 7.2 18.9 20.4 BnL

Furosemide (Lasix®)

0.6 2.7 6.9 33.3 Non-DOH

Nifedipine retard (Adalat retard®)

5.1 5.2 32.6 33.3 Provincial

Salbutamol inhaler1 (Ventolin®)

92.2 1.0 386.0 4.4 Non-DOH

1Unit price presented per 200 dose inhaler; MPR calculated per dose.

44

(b) Compared to generic products procured at surveyed hospitals

PITC (originator brand) Surveyed hospitals (generic) Medicine

(originator brand)

Procurement unit price

(PHP)

Procurement MPR

Lowest procurement unit

price (PHP)

Lowest procurement

MPR

Source of MPR

Amlodipine (Norvasc®)

12.0 8.9 5.0 3.7 DOH – Region I

Captopril (Capoten®)

6.7 7.2 1.5 1.6 DOH – Region VII

Furosemide (Lasix®)

0.6 2.7 0.6 2.9 BnL

Nifedipine retard (Adalat retard®)

5.1 5.2 - - -

Salbutamol inhaler1 (Ventolin®)

92.2 1.0 242.8 2.8 Non-DOH

1Unit price presented per 200 dose inhaler; MPR calculated per dose.

PITC Pharma aims to sell these originator brands at around half the retail price of the equivalent

originator product in the Philippines. Multinational companies argue that the products which PITC

Pharma imports are intended for local Indian and Pakistani markets and are somehow different (in

‘quality’ of packaging and ingredients) to the local products and that the parallel imports make the

supply chain more prone to introduction of counterfeit products onto the market. While there is little

basis for the first point and some basis for the second, more important is that parallel importation of

originator brands should take second place to the importation or other procurement of good quality

low cost generics as part of a programme to make essential medicines accessible and affordable to the

poor.

The case of captopril (the one case where PITC Pharma had corresponding procurement of a generic

with a parallel imported product) suggests that PITC can more effectively make cheaper medicines

available through procurement of generics – the generic was procured at 2.5 times the reference price

(PHP 2.4/unit) while parallel imported Capoten® was 7.2 times the reference price (PHP 6.7/unit).

However, the comparison with generic prices was not always so clear in that PITC appeared to be able

to parallel import originator brand furosemide tablets and salbutamol inhaler at prices lower than

generics being procured by procurement entities. It should be noted that both of these products were

not commonly procured by hospitals and may have limited generic versions available.

3.10 Procurement of originator brands

Most facilities were procuring generic medicines as required under the Generics Act and associated

regulations (RA 6675/1988; AO 51/1988). However, there were some medicines procured as

originator brands (and many other procured as ‘branded-generics’ although this data could not easily

be captured). Given that generic equivalents of these medicines should be available, procurement of

the originator brands is not necessary. However, the hospitals made use of the mechanism whereby

therapeutic committees could specify which medicines the hospital should be procuring.

As seen in Tables 9 and 10, there is a significant premium to the purchase of originator brands, which

averages at around 5.7 times when using matched pair data (originator brand summary MPR divided

by generic summary MPR, only where both the originator brand and generic data were available for

the same product). The true premium is often much higher given that some of the generics are high

priced ‘branded-generics’. If one considers data at two facilities that procured the most originator

45

brands the brand premiums were (using matched pair data) 14.5 (DOH-NCR; n=6 matched pairs) and

4.2 (non-DOH; n=29).

The variation in brand premiums can be seen by looking at the procurement MPRs of individual

medicines as shown in Figure 11 and Figure 12. Some medicines have extremely high brand premiums

e.g. captopril (originator 17 times the price of the generic when procured at DOH-retained hospitals,

10 times the price at BnL and 13.8 times at non-DOH hospital). This contrasts with regular insulin

where the originator brand was procured at less than the international reference price (MPR 0.9) and

was 1.4 times the price of the cheapest generic at the non-DOH hospital.

Figure 11. Procurement prices (as MPRs) of medicines procured as originator brands at (a) DOH-retained hospitals, (b) provincial hospitals and (c) the Botika ng Lalawigan

(a) DOH-retained

(b) Provincial (only two medicines

procured as originator

brands; corresponding

generics not procured)

Procurement MPRs for medicines procured as originator brands at DOH-retained hospitals

0

5

10

15

20

25

30

35

40

Diaze

pam

Cap

topr

il

Cipro

floxa

cin

Ran

itidine

Am

lodipine

Cef

triax

one

inj

Met

ronida

zole sus

p

Digox

in

Co-

trim

oxaz

ole

susp

Me

dia

n p

rice r

ati

o

Originator brand Generic

Procurement MPRs for medicines procured as originator brands by provincial hospitals

0

5

10

15

20

25

30

35

40

Digoxin Nifedipine Retard

Med

ian

pri

ce

rati

o


46

(c) Botika ng Lalawigan

Procurement MPRs for medicines procured as originator brands at Botika ng Laliwigan

0

5

10

15

20

25

Amlodipine Atorvastatin Captopril Digoxin Gliclazide

Med

ian

pri

ce

ra

tio


47

Figure 12. Procurement prices (as MPR) of medicines procured as originator brands (and as generics in most cases) at the non-DOH hospital.

Procurement MPRs for medicines procured as originator brands at non-DOH

hospital

0 5 10 15 20 25 30 35 40 45

Fluoxetine

Diclofenac

Metronidazole 500mg

Omeprazole

Ciprofloxacin

Co-trimoxazole tabs

Diazepam

Furosemide tablet

Cotrimoxazole DS

Ranitidine

Captopril

Atenolol

Enalapril

Chloramphenicol caps

Amlodipine

Simvastatin

Ceftriaxone inj

Imipramine

Metronidazole susp

Digoxin

Isosorbide dinitrate

Amoxicillin+clav

Salbutamol syrup

Cefuroxime

Co-trimoxazole susp

Metformin

Salbutamol inhaler

Gliclazide

Amoxicillin

Amoxicillin susp

Insulin soluble rDNA

Median price ratio


58.1

79.3

63.5

48

4. Stories from the field Various observations were made during the field visits of the procurement practices at various

facilities and pharmacists and other contact persons shared some of their experiences which provide a

valuable insight into the workings of public procurement and medicine pricing in the Philippines.

Some of them are captured here. While they are categorised, some are cross-cutting and all quotations

should be considered as paraphrased versions of what the person said.

Procurement

The pharmacist at a DOH-retained hospital checks the Notice of Award prices from the bidding with those of another DOH-hospital where she has a friend. If the prices being offered locally are much higher, she contacts the winning bidder company and ‘negotiates’ with them to lower the price – and they usually do.

“I noticed the prices of ceftriaxone and cefuroxime were higher than in the retail pharmacies so I contacted the procurement office – next quarter the prices were much reduced.” – provincial pharmacist

The invoices and delivery notes in this municipality were kept by the accountant and the approved auditor – but the filing was such that many of them could not be located.

“Yes, we always have enough money for our medicines procurement. The budget is decided and we set our procurement plan accordingly. But we only procure for inpatients and the medicines do run out in the 3rd or 4th quarter.” – district hospital medical officer

One DOH-retained hospital got non-winning bidders to do the consignment. Consignment at many hospitals was usually used to procure products that were ‘branded-generics’.

The municipal GSO was splitting orders so as to make each one less than PHP 250,000 so they could do shopping (canvassing) instead of bidding.

At this DOH hospital, the invitation to bid specified that companies should offer products which are highly saleable (fast-movers) and commonly sold in main retail pharmacies – it allowed them to get a higher proportion of ‘branded-generics’.

It is impossible to predict the quantities of antibiotics needed each year because prescribing will change depending on which med reps have visited. – DOH pharmacist

“The neurologists insist on the branded products. We procure generics so they send the patients to the drugstores to buy them. We use the generics for the charity cases.” – DOH procurement officer

49

“We go the bid opening and we listen; just listen and nod.” – provincial hospital pharmacist (with a knowing smile)

“Ah, yes. Prices in that province are quite low because they are not fixed. Here they are high because the bidding is fixed – I know, because I am the one who benefits by

being the friend of the governor.” – distributor

Corruption, ethics and enforcement

Botika ng Barangays

“There is no collusion between distributors to divide the market here – we wouldn’t trust them and they wouldn’t trust us” – generic medicine distributor

“It’s amazing how many senior citizens seem to need oral contraceptives.” – retail pharmacist (referring to abuse

of the senior citizen discount)

We have had doctors write prescriptions in code so that we cannot understand them. That way the patient would have to go to the doctor’s own pharmacy for

the medicine.” – provincial pharmacist

“Doctors have deals with distributors and will prescribe their products” – provincial pharmacist

“The company employed a physician to stand outside my pharmacy to examine patients’ prescriptions and offer to change their generic medicines to the company’s brand name medicines.” – retail pharmacist

“The doctors prescribe by generic name but put the brand name as well and tell the patient to get that one and the patient doesn’t know any better.” – retail pharmacist

“Patients don’t believe a medicine could work if it can be sold for just 25 centavos a tablet. So we charge P1” – BnB operator

“Cotrimoxazole suspension is not a big seller – the bottle costs too much and it is difficult to store. Patients prefer tablets that they can buy one-by-one, even for children.” – BnB operator in NCR

“We have no problems selling cotrimoxazole suspension – after all, what else can one use for children?” – BnB operator in Region VII

Municipal and CHD supervisors were assisting BnBs operators to prepare the required financial records but lacked key financial skills themselves to be able to determine the success of BnB operations.

In some municipalities they were making sure that BnBs were only serving remote communities at least 5km from the nearest retail pharmacy, in others they were not concerned about this and were happy if the BnB provided competition for the local drugstores.

“The BnBs are getting medicines so much cheaper than the city health office that we want to register them as distributors so that they can take part in our bidding to supply the city.” – city health official

The corruption ‘cut’ is known as “the SOP” – it is standard operating procedure

50

“The supervising pharmacist has left the country and we haven’t been able to find a replacement yet.” –BnB supervisor

In one province, some fast-moving (saleable) medicines were being sold at prices above the official mark-up to make up for loss to expiry of unwanted medicines; in another they kept rigorously to the 30% mark-up and made arrangements with district hospitals to exchange medicines close to expiry.

51

5. Discussion

5.1 Main discussion

The main observations from the survey procurement price were:

1. Overall, public procurement operations at DOH-retained, provincial and district

hospitals procure generic medicines at 2.9 times the international reference price

(prices available on the international market from mostly not-for-profit suppliers).

This compares to public procurement summary MPRs of 1.5 (China, Shanghai 2006), 1.7

(Indonesia 2004), 1.1 (Malaysia 2004), 1.5 (Thailand 2006), 1.1 (El Salvador 2006), 1.0 (Ghana

2004), 0.6 (Jordan 2004) (obtained from database at http://www.haiweb.org/medicineprices March

2009). Although these values have not been adjusted for changes in MSH reference prices over

time, exchange rates or inflation, such adjustments would not explain the clear difference seen

between the poor efficiency of public procurement in the Philippines compared to that in other

countries including some regional examples. This does not mean that all public procurement in the

Philippines is inefficient. In fact, individual hospital summary MPRs varied from 0.7 to 9.3 and

PITC Pharma procured generics at an average (median) MPR of 1.0. This indicates that it is

possible to have efficient public procurement but that it is not a common feature of everyday

practice (only two hospitals had median MPRs less than 1.5 and only four hospitals a median

MPR less than or equal to 2.0).

The previous survey in the Philippines in 2005 (Batangan et al. 2005) found a median MPR for

procurement of generic medicines of 5.1 from a single public hospital. The variability observed in

the current work validates the need for much wider evaluation of public procurement where

decentralised procurement is the norm.

2. When originator brands are procured, they are on average at 15.7 times

international reference prices. Using matched pair data indicated a brand premium

of around 5.7 i.e. procuring a brand would on average cost 5.7 times more than

procuring the equivalent generic medicine.

The brand premium may in fact be underestimated due to some hospitals procuring ‘branded-

generics’ at high prices, which were simply considered as generic equivalents in this study. Public

hospitals should be procuring low-priced generics and not be led in medicine selection by

unsubstantiated perceptions linking quality to company names and/or price of products. This

would allow more judicious and efficient use of resources that should maximise numbers of

patients treated within the public healthcare system. If BFAD were to ensure the quality of

generics on the market by rigorously applying cGMP certification of manufacturers, this would

help to undermine the perceived need for ‘branded-generics’ and originator brands (where

corresponding generic equivalents exist).

3. DOH-retained hospitals were generally more efficient at procuring medicines (as

judged by price) than provincial hospitals, and provincial hospitals more efficient

than municipal hospitals.

52

It is difficult to make robust conclusions based on this observation due the variability seen within

each level of procurement and the lack of data on the volume of procurement. The former suggests

that there are factors that influence the efficiency of the procurement process other than simply the

‘level’ of procurement. These could include lack of management and/or procurement skills at

lower levels, greater risk of corruption at LGUs related to less central oversight, and structural

factors i.e. the presence of established procedures, established audit or oversight mechanisms. In

the absence of further information this remains speculation. However, it does indicate a need for

greater attention to be paid to LGU procurement to improve efficiency, although the variability in

DOH-retained hospital procurement also warrants further attention.

4. The lowest MPR observed was 0.3 (gliclazide tablets and cefuroxime injection)

showing that it is possible to procure generic essential medicines at prices

comparable to those available on international markets.

The results of this survey have shown that, at least for some essential medicines, it is possible to

procure generic medicines in the public sector at international prices. This stands in contrast to the

perception that medicines are expensive in the Philippines (although this latter statement is usually

made with regard to private sector prices where the majority of the population obtain their

medication). However, most of the procurement entities in the Philippines were not procuring

generic essential medicines at prices comparable to those available on international markets

indicating that there is more work to be done to make this an accepted and commonplace practice.

Furthermore, detailed study would be required to examine links between the accessibility of low

prices to the number of generic products on the market, the presence of ‘branded-generics’ and

other contributing factors.

One observation from the survey was that some facilities were ordering medicines in small

quantities e.g. ordering by the hundred, and, at least in some cases, the procurement entity (the

provincial or municipal GSO) was neither pooling these requests with those from other facilities

nor performing a single annual procurement. Rather, they were conducting multiple small

procurements throughout the year. Not only is this inefficient in terms of administrative resources,

but procurement of small quantities will not attract any volume discounts from distributors or

manufacturers. At the same time, for smaller hospitals, it is likely that even the annual

procurement in some cases would not be large enough for significant volume discounts.

Improving local procurement practices and finding mechanisms whereby municipalities could

participate in provincial or regional pooled procurement could have an impact on the prices

obtained at lower levels (provided the pooled procurement is operated in an efficient and

transparent manner). Increasing provision of medicines through public outlets would have the

effect of increasing buying and negotiating power.

5. There is extreme variability in the efficiency of public procurement of essential

medicines in the Philippines – this can mean that people living in different regions

(or even different provinces or municipalities within the same region) do not have

the same access to essential medicines, in terms of affordability.

The extreme variability is difficult to explain or understand. In some cases, the variability was due

to one hospital procuring a ‘branded-generic’ while another was procuring a low-priced generic,

but this does not explain all cases. It is tempting to ascribe much of the extreme high prices to

corruption within hospitals or LGUs. However, while this may be one factor (although no proof

53

can be forwarded to support it), there may be others at play. One casual observation was that

companies appeared to be offering widely different prices to various facilities. Although this

would need confirmation, this could relate to the fact that public tenders indicate their ceiling bid

price which will be accepted. Where this is based on historical high prices or poor information,

bidders may be tempted to use this as a guide for their bid, especially where they are aware of

which other companies are likely to bid for pharmaceutical supplies at that hospital or procuring

entity (in spite of there being over 4,000 distributors registered in the Philippines, many of the

tenders viewed during the survey attracted only 3-5 bidders, sometimes the same companies from

year to year). Wider use of PhilGEPS or other means of advertising public tenders could help to

overcome this practice and monitoring and dissemination of public procurement prices could help

to improve the setting of ceiling prices and the negotiating power of procurement entities.

However, more study of this phenomenon (variability in bid prices) is required.

6. There can be extreme variability in the efficiency of public procurement of the

same item within the same hospital from one procurement cycle to the next (even

within the same year).

This observation is also difficult to understand. Not all the examples noted could be explained by

the procurement of ‘branded-generics’ compared to procurement of low-priced generics and none

seemed to be related to the placing of emergency orders. There may be a failure of the hospital or

procurement entity monitoring the past procurement prices and in the subsequent setting of

appropriate ceiling prices for future bids. There may also be cases where bidding has failed and

the entity has to go ahead with a higher than desired price but most of the items where this

variation was observed were common items for which multiple generic versions should exist. The

variability could be interpreted as an indicator of a more general failure of the pharmaceutical

market and the bidding system in public tenders. If it were functioning appropriately such wide

variations in pricing would not be expected due to the effects of competition.

7. In spite of acts and regulations on procurement, the interpretation and

implementation of these pieces of legislation can vary between procurement

entities.

The Philippines has been recognised as having an appropriate regulatory framework for public

bidding (WHO 2006). However, great care should be placed on interpretation of such statements

since they do not take into account whether the relevant laws and regulations are being

appropriately implemented. Some variability in interpretation and implementation was observed.

For example, one DOH-retained hospital awarded consignment contracts preferentially to non-

winning bidders rather than winning bidders, negotiations took place in one instance with winning

bidders after the bidding process in order to try and correct unreasonably high prices (after

consultation with other hospitals), there was intentional procurement of ‘branded-generics’ or

originator brands at some facilities and the Botika ng Lalawigan performed bidding for companies

to supply by consignment. Of more concern are the credible stories of bidding being undermined

through corrupt practices and cases where bids are split to avoid using tendering procedures. There

seems to be a need for greater oversight of the procurement process, focusing on high-risk

procurement entities. This should be performed by persons suitably trained and/or experienced

with pharmaceutical procurement in order to identify where unreasonable requirements are being

placed in bid documents.

54

8. PITC Pharma is able to procure low-priced generic essential medicines using its

current structures, procuring generics on average at levels similar to the

international reference prices.

This shows the value of pooled procurement and PITC or a similar central procurement entity can

play a significant role in the supply of low-priced essential medicines. However, centralised public

procurement has been found to have significant drawbacks in the past (increased bureaucracy,

delays in procurement and distribution, claims of central corruption) which is one reason that

procurement is now decentralised in the Philippines. It should be noted that PITC procurement of

generics generally involves bidding from local distributors – thus the prices they are achieving,

less any volume discount, could theoretically be available to other procurement entities.

Of the 21 medicines procured by PITC Pharma as generics, 11 were procured at or below the

international reference price indicating efficient procurement. However in seven cases the PITC

Pharma procurement price exceeded the lowest procurement price from the other procurement

entities included in this survey. This indicates that PITC Pharma could perform better but it may

be that there are reasonable explanations for these occurrences that could have been elucidated by

more detailed data collection. In particular, it should be noted that not all of the PITC Pharma

procurements were from 2008 (some were from 2007). In addition, when PITC Pharma is

requested to procure on behalf of the DOH it is given a maximum procurement price which

probably becomes the likely bid price by participating bidders.

In addition, it is recognised that there will need to be modification of the operational environment

of PITC Pharma (or any centralised public procurement agency) so as to be able to predict with

some accuracy the demand for the medicines which it procures. It should also not be faced with

the conflicting interests of creating demand through its own network of retail outlets or other

special programmes or relying on parallel importation for cross-subsidisation of basic procurement

operations.

9. Procurement by consignment may be effective at increasing ‘availability’ of

medicines but tends to lead to increased prices.

Although true availability of medicines was not measured, where procurement by consignment

was practiced, pharmacists were of the view that it had contributed to medicines being available

which would otherwise not be procured or would be of insufficient quantity for the expressed

need. Those DOH-retained hospitals using consignment, generally applied it to procure medicines

they also procured by bidding. However, in a number of cases the product procured by

consignment was the ‘branded-generic’ rather than a low-priced generic. This gave the impression

that consignment tended to lead to higher prices even though the regulations related to

consignment require that the price be the same as the bid price.

The Botika ng Lalawigan of Oriental Mindoro (BLOM) only used consignment for its

procurement, which was then used for supplying the provincial hospital, a provincial retail outlet

and various other facilities that made use of the service. Consignors were chosen through a

bidding process. BLOM had a summary procurement MPR of 1.9 that was comparable to those

achieved by DOH-retained hospitals and better than those attained by other provincial

procurement entities. BLOM did procure some originator brands (five) that was reportedly to

address the needs of the clientele for their retail outlet. Some of the higher prices at BLOM could

55

relate to it running a revolving fund that was used to support payment of overheads and salaries.

However, its median MPR was lower than other hospitals with RDFs possibly because it did not

need to support medicine purchases under the consignment system. More study is needed of the

BLOM case and the use of consignment at other facilities to determine whether it is a suitable

method to support (or replace) hospital procurement of medicines.

10. Revolving funds to support procurement of medicines appear to increase

availability of medicines but also result in higher prices for patients.

Some institutions use the revolving fund to procure high cost originator brands and ‘branded-

generics’ since these result in higher returns. The non-DOH hospital in this study utilised ‘income’

from the RDF to pay overheads and some staff salaries (as did BLOM). These findings are in

keeping with past experience with RDFs that have shown that, depending on how they are

implemented, they can contribute to irrational use of medicines and higher prices (Uzochukwu &

Onwujekwe 2005; Uzochukwu et al. 2002). In spite of this, RDFs are still proposed in some

sectors as a means of addressing chronic public underfunding of medicines and a means of

retaining or motivating staff provided that appropriate training and support is given (Umenai &

Narula 1999; Ali 2009).

11. PITC Pharma parallel imported originator brands are cheaper than locally available

originator brand products and, in some cases, cheaper than seldom publicly

procured generic equivalents.

While some parties may consider the parallel importation scheme of PITC Pharma as a means of

procuring low-priced medicines for Filipinos, there are adverse consequences that need to be

considered. Since the parallel imported originator products cost more than low-priced generics, the

focus should be on provision of quality generic products. Parallel importation of originator brands

should be reserved for cases where generic products do not exist in the market (usually when the

originator product’s patent is still in force) or are unreasonably priced – as may be the case with

generic furosemide (lowest MPR 2.9) and salbutamol inhalers (lowest MPR 2.8). However, the

presence of parallel imports can have the effect of reducing the incentive for generic companies to

enter the market due to increased uncertainty of the expected market size in the presence of

parallel imports. The parallel importation scheme needs to be closely monitored to ensure that it

does not contribute to such an effect.

5.2 Limitations of this study

� While the study is able to provide a national overview of the procurement efficiency at DOH-

retained, provincial and district hospitals, the regions of Mindanao and the Cordillera

Administrative Region (incorporating Mountain Province) could face peculiar difficulties due to

their geographical and geopolitical situations that might impact on procurement prices. However,

the data suggest that distance from NCR or a major port is not a significant factor.

� It was not possible to obtain reliable volume data to correlate to procurement prices. However,

where this data was available it suggested that there is no clear correlation between volume and

procurement. This is something which requires further study.

� While procurement prices were not studied at the level of the true procurement entity in all cases

e.g. data collected from provincial hospitals rather than the provincial GSO, the data was validated

56

using documentation on which actual procurement prices were indicated and this limitation should

not impact on the validity of the results.

� This study focused purely on procurement price as a measure of procurement efficiency and did

not consider other aspects of the procurement cycle or implementation of procurement. A more

detailed study would be required to investigate the causes of low procurement efficiency/high

procurement prices.

� The international reference prices used in the WHO/HAI methodology represent Free-On-Board

(FOB) prices for medicines whereas the procurement prices obtained by the facilities in this survey

include any insurance and freight as well as applicable taxes, transportation, warehousing and

other costs. However, experience from studies in more than 50 countries has shown that it is

possible for the public sector to procure quality-assured generic medicines including such costs at

prices below MSH reference prices (http://www.haiweb.org/medicineprices). Even allowing for

additional costs, these should not exceed 30-50% of the FOB price i.e. MPRs should be less than

1.5.

Public procurement regulations require that distributors provide proof of registration with BFAD

in the form of a Certificate of Product Registration (CPR) and all batches should undergo quality

control (QC) testing by BFAD. However, BFAD does not rigorously apply Good Manufacturing

Practice and, due to capacity constraints, pharmaceutical products may actually be used before QC

results become available. However, while there were strong perceptions of links between quality

and price amongst key informants, only one case of proven poor quality (of cefuroxime injection)

could be forwarded in support of this view.

6. Recommendations

While this study is focused on the public sector procurement prices of selected essential medicines,

there are several broader issues that can have an impact on the prices and affordability of medicines in

the Philippines. Therefore, recommendations emerging from this study are presented in the context of

these wider areas of concern.

A. Improving transparency and governance in public procurement practices

� A reliable system of regular monitoring of procurement prices at the level of the procuring entity

should be developed with the results published and actively shared between health facilities to

improve price transparency and price awareness.

� Random audits of procurement methods and adherence to the Government Procurement Reform

Act should be performed by competent authorities ensuring that persons of the necessary skills or

experience in pharmaceutical procurement are involved in the activity.

� Municipal authorities may need appropriate training and capacity building for effective

implementation of efficient procurement. Mechanisms whereby they could participate in pooled

procurement at a regional or provincial level should also be investigated.

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� Further, more detailed, study is required to investigate the variations seen in procurement prices

within and between procurement entities and the factors that contribute to this.

� Greater transparency is needed within the public procurement process including ensuring the use

of PhilGEPS (or establishing a public tender newspaper) and timely public availability of Notice

of Awards and bid prices.

B. Financing of medicines in the public health sector

� Public funding of hospitals should be increased to aid in covering the medicine needs of inpatients

and outpatients. The availability of such funding could be made pursuant to the implementation of

efficient procurement mechanisms.

� Accountability of local government units should be improved on how they allocate and use

resources for delivery of medical services, including the provision of medicines. Civil society

organisations should play a more active role in monitoring public expenditures for delivery of

essential health services, including the procurement of medicines.

� PhilHealth should develop relevant benefit packages which include the provision of outpatient

medicines and it should use its “buying power” to control the costs of medicines used in treating

its beneficiaries.

C. More efficient methods of medicines procurement

� PITC Pharma (or any centralised public procurement agency) should concentrate on procuring

quality-assured generic medicines for the public sector and reserve parallel importation of

originator brands for those products that have no or few generic medicines registered in the

Philippines and for which there is an expressed need.

� Further investigation of the operation of revolving funds for the procurement of medicines is

required and how they impact on availability and price compared to best practice procurement

models i.e. current well-performing, efficient procurement entities.

� Mechanisms whereby municipal authorities could participate in pooled procurement at a regional

or provincial level should be investigated.

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D. Assuring quality and dealing with interchangeability issues

� The Bureau of Food and Drugs (BFAD) should rigorously apply standards of current Good

Manufacturing Practice (cGMP) to all manufacturers providing medicines for the Philippines

market.

� BFAD should set clear standards and requirements on how interchangeability of products should

be demonstrated by manufacturers of generic medicines and should disclose information about

products on the market that are proven to be interchangeable.

� BFAD should enhance its post-marketing surveillance system to monitor the quality of medicines

and take strong regulatory actions when poor quality medicines are found anywhere in the supply

system.

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7. References and bibliography

Ali GKM. How to establish a successful revolving drug fund: the experience of Khartoum state in the Sudan. Bull World Health Organ; 87(2): 81-160. Balasubramaniam K. (1996) Health and pharmaceuticals in developing countries: towards social justice and equity. Penang, Malaysia, Consumers International-Regional Office for Asia and the Pacific. Batangan DB, Echavez C, Santiago AA, de la Cruz AC, Santos E. (2005) The Prices People Have to Pay for Medicines in the Philippines. (http://www.haiweb.org/medicineprices/surveys/200502PH/sdocs/survey_report.pdf; accessed February 2009) COA (2006) Government-Wide Performance Audit Report on the Procurement System of the Department of Health (CY 2005). Manila, Commission on Audit. http://www.coa.gov.ph/GWSPA/2005/DOH_PA2005-08A.htm DOH (2002) A handbook on inter-local health zones: district health system in a devolved setting. Manila, Department of Health. DOH. (2005) Chapter 3. Improving health system performance. In: National Objectives for Health 2005-2010. Manila, Department of Health. http://www2.doh.gov.ph/noh2007/NohMain.htm DOH (2008). Department Memorandum 38 of 2008. Amendment to Memorandum No. 31 dated 17 February 2003 re: drugs to be sold in Botika ng Barangays (BnBs). Manila, Department of Health. DOH (2009) National Drug Policy - Pharmaceutical Management Unit 50. http://www.doh.gov.ph/ndp Gloor R (2009) Pricing strategies and structure. Presentation to MeTA (Medicines Transparency Alliance 2nd National Forum, 21-23 January 2009, Manila, Philippines. Hartigan-Go K, Curameng JMD (eds) (2007) Dilemmas & choices: case studies on the difficulties inherent in the practice of good governance in healthcare. Manila, Zuellig Foundation. Kanavos P, Lim JY, Pascual CS. (2002) On improving the poor’s access to affordable medicines. Philippines Health Policy Note: World Bank. (Unofficial version available from http://www.pcij.org/blog/wp-docs/World_Bank_Notes_on_Improving_Poor%27s_Access_to_Affordable_Medicines.pdf; accessed February 2009) Lim J. (1997) Issues concerning high drug prices in the Philippines. WHO Project Report, Manila. (WHO Project PHL/DAP/010/VD96.999.00) MSH (2002) Pasay City. Health Sector Reform Technical Assistance Project report. Management Sciences for Health. http://erc.msh.org/mainpage.cfm?file=hsrtap.htm&language=english&module=health MSH (2007) International drug price indicator guide. Cambridge MA, Management Sciences for Health. http://erc.msh.org/mainpage.cfm?file=1.0.htm&id=1&temptitle=Introduction&module=DMP&language=English

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National Formulary Committee (2005) Philippine National Drug Formulary. Volume I. 6th Ed. 2005. Manila, Department of Health. National Formulary Committee (2008) Philippine National Drug Formulary. Volume I. 7th Ed. 2008. Manila, Department of Health. http://www.doh.gov.ph/pndf/formulary NSO (2008) Philippines in numbers. Manila: National Statistics Office. Obermann K, Jowett MR, Alcantara MOO, Banzon EP, Bodart C (2006) Social health insurance in a developing country: The case of the Philippines. Social Science & Medicine 62: 3177–3185. OPS (2007) PGMA's Arrival Statement after an Official Visit to China and India, Ninoy Aquino International Airport (NAIA) Terminal 2, Pasay City. 06 October 2007. Manila, Office of the Press Secretary. http://www.ops.gov.ph/speeches2007/speech2007_oct06.htm Orilla R. (2007) Generic drug trends in the Philippines http://www.bssintranet.com/IBPA_articles/dec2007issue/GENERIC%20DRUG%20TRENDS%20IN%20THE%20PHILIPPINES.htm Pabico AP. (2006) New Rx needed for generics movement. Philippines Center for Investigative Journalism. http://www.pcij.org/i-report/2006/generics.html Parafina D. (2003) Diagnosing DOH’S drug procurement program: (a case study on government systems monitoring). Manila: Ateneo School of Government, 2003. http://www.ansa-eap.net/sites/default/files/8DiagnosingDOHsDrugProcurement_Parafina_2003.pdf Paredes A. (2008) Quantifying corruption, qualifying efficiency. Differential expenditure and efficiency measurement (DEEM) tool. In: Yes, pigs can fly. Manila: Procurement Watch Inc, 2008. PhilHealth (2008) Stats and Charts January – June ’08. http://www.philhealth.gov.ph/about_us/others/snc2008.pdf PITC (2007) Program mechanics. Botika ng Bayan. Philippine International Trading Corporation. [cited 2008 December 3]; http://www.pitc.gov.ph/bnb1.htm PWI (2004) Monitoring of the procurement of local government units based on the implementing rules and regulations of the Government Procurement Reform Act. Manila: Procurement Watch Inc. http://www.partnershipfortransparency.info/uploads/completed%20projects/Philippines%20-%20Procurement%20Watch%20Report%20-%202004.pdf Ramos JG. (2006) Pharmaceutical policies for affordable access. http://www.pcij.org/blog/wp-docs/BFAD_on_Pharmaceutical_Policies_for_Drug_Access.pdf Republic of the Philippines (2007). Senate Bill 1658. An act providing for cheaper medicines and for other purposes. http://www.senate.gov.ph/lisdata/60435396!.pdf OECD (2006) BLI Assessment of the Philippine Public Procurement System 2006. http://www.oecd.org/dataoecd/17/44/39244775.pdf Quimson G. (2006) National Integrity Systems: Transparency International Country Study Report, Philippines 2006. Berlin, Transparency International. http://www.transparency.org/content/download/15149/162858

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Tisocki K (2009) Quality and safety monitoring through effective post-marketing surveillance. Presentation to National Health Staff Meeting of Department of Health, 4-6 March 2009, Tagbiliran, Bohol, Philippines. Umenai T, Narula IS (1999) Revolving drug funds: a step towards health security. Bull World Health Organ; 77 (2): 167-171. Uzochukwu BSC, Onwujekwe OE, Akpala CO. (2002) Effect of the Bamako-Initiative drug revolving fund on availability and rational use of essential drugs in primary health care facilities in south-east Nigeria. Health Policy Plan; 17: 378-383. Uzochukwu B, Onwujekwe O. (2005) Healthcare reform involving the introduction of user fees and drug revolving funds: influence on health workers’ behavior in southeast Nigeria. Health Policy; 75 (1): 1-8. Wagner AK, Valera M, Graves AJ, Laviña S, Ross-Degnan D. Costs of hospital care for hypertension in an insured population without an outpatient medicines benefit: an observational study in the Philippines. BMC Health Serv Res. 2008 Jul 29; 8:161. WHO/HAI (2003) Medicine prices. A new approach to measurement. 2003 Edition. Geneva, WHO/HAI. WHO/EDM/PAR/2003.2. WHO/HAI (2008) Measuring medicine prices, availability, affordability and price components. 2nd Edition. Geneva, WHO/HAI. WHO/PSM/PAR/2008.3. WHO (2006) Measuring Transparency in Medicines Registration, Selection and Procurement: Four Country Assessment Studies. Geneva, WHO. WHO/PSM/PAR/2006.7. http://www.who.int/entity/medicines/areas/policy/goodgovernance/Transparency4CountryStudy.pdf WHO WPRO Health Cluster Toolkit. (2007) Country Health Information Profile: Philippines. http://www.wpro.who.int/internet/files/eha/toolkit/Country%20Profiles/CHIPS/philippines.pdf World Bank (2001) Filipino report card on pro-poor services. http://www.adb.org/Documents/Events/2001/Report_Card_Surveys/report.pdf

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Annex 1. National Pharmaceutical Sector Form

Abridged questionnaire: structures & processes of country pharmaceutical situations

Country: Philippines Date (dd/mm/yyyy) : 06 December 2008

Questions Responses Explanations

NATIONAL MEDICINES (DRUGS) POLICY (NMP)

Please consult the health ministry, medicines regulatory authority and/or medicine service in answering the questions in this section.

1.1 Is there a National Medicines Policy (NMP) document? If no, skip to 2.

A national medicines (drug) policy document is a written expression of the

Yes No Don’t Know RA 6675/1988 and RA 9502/2008 do set out policy objectives but are not part of a sector wide policy document.

A national medicines (drug) policy document is a written expression of the government’s medium to long term goals and priorities for the pharmaceutical sector and the main strategies for attaining them.

a) If yes, is it an official or draft document?

Mark “official” if the NMP document has been endorsed or officially

Official Draft Don’t Know Mark “official” if the NMP document has been endorsed or officially adopted by the government otherwise mark “draft”.

b) What year was it last updated?

Indicate the year of last update whether the document is still in draft form

Year Indicate the year of last update whether the document is still in draft form or has been officially adopted.

1.2 Is there an NMP implementation plan that sets activities, responsibilities, budget and timeline?

Yes No Don’t Know

a) If yes, when was it last updated? Year

REGULATORY SYSTEM Please consult the medicines regulatory authority in answering the questions in this section. Specific information regarding medicines tested for quality

control purposes and monitoring of adverse drug reactions may need to be obtained from the quality control laboratory or the responsible

agency/department.

Regulatory authority

2.2 Is there an existing formal medicines regulatory authority?

This question is asking if there is a formal regulatory body with existing

Yes No Don’t Know This question is asking if there is a formal regulatory body with existing staff and a specific budget for conducting relevant medicines (drug) regulatory functions. Mark “no” if medicines regulatory functions, such as registration and licensing, are performed on an ad-hoc basis by an office, group or department that performs other pharmaceutical service functions, such as supply management and procurement.

2.3 What are the sources of funding for the medicines regulatory authority:

Regular budget from the government: Yes No Don’t Know

Fees from registration of medicines: Yes No Don’t Know

Other: Yes No Don’t Know

2.4 Are there legal provisions requiring transparency and accountability and promoting a code of conduct in regulatory work?

This question is asking whether there are legal provisions (or legislation)

Yes No Don’t Know This question is asking whether there are legal provisions (or legislation) requiring the regulatory authority to: Define its policies and procedures in writing and publish the written documentation, Give reasons for decisions to affected parties, Account for its conduct and actions to individuals or groups and ultimately to the public, and Follow a code of conduct in conducting its regulatory functions.

2.6 Is there a medicines regulatory authority website providing publicly accessible information on any of the following: legislation, regulatory procedures, prescribing information (such as indications, counterindications, side effects, etc.), authorised companies, and/or approved medicines?

Yes No Don’t Know

Marketing authorization

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2.7 Are there legal provisions for marketing authorization?

This question is asking if there are legal provisions (or legislation) that This question is asking if there are legal provisions (or legislation) that describe

Yes No Don’t Know This question is asking if there are legal provisions (or legislation) that describe the legal conditions under which marketing authorization should be conducted. Marketing authorization is an official document issued by the medicines regulatory authority for the purpose of marketing or free distribution of a product after evaluation for safety, efficacy and quality and/or after registration of a product for marketing.

2.8 How many medicinal products have been approved to be marketed? (count total number

of unique dosage forms and strengths)

Tablets, capsules, injections, elixirs and suppositories should be counted in

Number 16,791 Tablets, capsules, injections, elixirs and suppositories should be counted in different strengths. For example, if Paracetamol (Brand X) 250 mg and 500 mg have been approved to be marketed, they count as two medicinal products because they are two unique strengths. Paracetamol (Brand Y) 250 mg and 500 mg are another two unique products.

2.9 Is a list of all registered products publicly accessible?

Registered products are medicine products that have been evaluated for

Yes No Don’t Know Registered products are medicine products that have been evaluated for quality, safety and efficacy and thence authorised for marketing. In order to be publicly accessible, it should be available on the web or to anyone contacting the responsible authority.

Licensing

2.14 Are there legal provisions for licensing of the following:

This question is asking if there are legal provisions (or legislation) that

This question is asking if there are legal provisions (or legislation) that describe the legal conditions under which manufacturers, wholesalers and distributors and importers and exporters are subjected to evaluation against a set of requirements and issued a permit to operate (license) authorising them to undertake specific activities.

Manufacturers: Yes No Don’t Know

Wholesalers or distributors:

A wholesaler is a company that buys goods from a manufacturer or

Yes No Don’t Know A wholesaler is a company that buys goods from a manufacturer or importer and sells them to retailers. The wholesaler may be an agent for one company only or deal with products from several companies. Manufacturers may also be wholesalers for their own products. In some countries, pharmacies may also have a wholesaler license. Distributors include wholesalers, retail pharmacies and medicine outlets.

Importers or exporters of medicines: Yes No Don’t Know

Quality control

2.19 Is there a quality management system in place?

This question is asking if there is a an officially defined protocol for

Yes No Don’t Know This question is asking if there is an officially defined protocol for ensuring the quality of medicines, including testing of medicines to be registered, collection and testing of samples, reporting results, corrective actions to be taken when poor results are found and preventative measures to be taken to reduce future incidence of poor results.

2.20 Are medicine samples tested for the following regulatory purposes:

Medicines registration: Yes No Don’t Know

Post-marketing surveillance:

Post-marketing surveillance is testing medicine samples to assess the

Yes No Don’t Know Post-marketing surveillance is testing medicine samples to assess the quality of medicines that have already been licensed for public use.

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2.22 What is the total number of samples quality tested in the last calendar year?

This should include all samples tested whether in a quality assurance

Number 11,057 This should include all samples tested whether in a quality assurance laboratory within the country or outside the country.

2.23 What is the total number of samples tested in the last calendar year that failed to meet quality standards?

This should include all samples tested that failed to meet quality standards

Number 187 This should include all samples tested that failed to meet quality standards whether the testing was done in a quality assurance laboratory within the country or outside the country.

2.24 Are there regulatory procedures to ensure quality control of imported medicines?

This question is asking if there are standard operating procedures for

Yes No Don’t Know This question is asking if there are standard operating procedures for ensuring the quality of imported medicine, such as reviewing dossiers, product evaluation and testing of imported medicine products. This may include donated medicines.

Dispensing and prescribing

2.30 Are there legal provisions for the following:

This question is asking if there are legal provisions (or legislation) that

This question is asking if there are legal provisions (or legislation) that describe the legal conditions under which prescribers and the practice of pharmacy are licensed. Licensing is a system that subjects all persons to evaluation against a set of requirements before they may be authorized to prescribe medicines/practice pharmacy. It may include issuing an official permit and granting authorization to prescribe medicines/practice pharmacy by either the governing authority or the body regulating the exercise of the profession.

Licensing and practice of prescribers: Yes No Don’t Know

Licensing and practice of pharmacy: Yes No Don’t Know

2.31 Is prescribing by generic name obligatory in the:

A generic name (international non-proprietary name

A generic name (international non-proprietary name - INN) is a non-proprietary or approved name rather than a proprietary or brand name under which a generic medicine is marketed. If prescribing by generic name is obligatory then prescribers are required to prescribe by generic name.

Public sector: Yes No Don’t Know

Private sector: Yes No Don’t Know

2.32 Is generic substitution permitted at:

Generic substitution is the practice of substituting a product, whether

Generic substitution is the practice of substituting a product, whether marketed under a trade name or generic name, by an equivalent product, usually a cheaper one, containing the same active ingredient at the dispensing level. Mark “yes” if either generic substitution is required or if the dispenser is allowed to make a generic substitution in at least some instances.

Public pharmacies: Yes No Don’t Know

Private pharmacies: Yes No Don’t Know

2.33 Are there incentives to dispense generic medicines at:

Incentives may include dispensing fees or mark-ups which provide

Incentives may include dispensing fees or mark-ups which provide financial incentive for dispensers to dispense lower-priced generic medicines.

Public pharmacies: Yes No Don’t Know

Private pharmacies: Yes No Don’t Know

Promotion and advertising

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2.34 Are there provisions in the medicines legislation/regulations covering promotion and/or advertising of medicines?

This question is asking if there are legal provisions (or legislation) that describe the

Yes No Don’t Know This question is asking if there are legal provisions (or legislation) that describe the conditions under which the promotion and/or advertisement of medicines may be conducted. Promotion and advertisement are activities that provide health workers and consumers with information about medicine products, particularly with the intent of encouraging health workers and consumers to use a particular product.

3. MEDICINES SUPPLY SYSTEM Please consult the agency/department responsible for the procurement and supply of medicines in answering the questions in this section.

3.1 Is public sector procurement pooled at the national level (i.e. there is centralised procurement for the regions/provinces)?

Mark “yes” if public sector procurement is centralised and medicines are procured for

Yes No Don’t Know Mark “yes” if public sector procurement is centralised and medicines are procured for the entire public sector by a national procurement body even if in some instances, such as cases of stock outages, public sector facilities procure medicines through other means.

3.2 Who is responsible for public sector medicines procurement and distribution:

Procurement Distribution

Ministry of Health: Yes No DK Yes No DK

Non-governmental organization (NGO):

Mark “yes” if government funds or foreign contributions are allocated to

Yes No DK Yes No DK Mark “yes” for non-governmental organization (NGO) if government funds or foreign contributions are allocated to NGOs to procure or distribute medicines for the public sector. Non-governmental organizations (NGOs) are non-governmental, non-profit organizations, networks and voluntary associations including charities, community groups, faith-based organizations, professional associations, academia and trade unions.

Private institution contracted by the government:

Mark “yes” if the government contracts or makes an agreement with a

Yes No DK Yes No DK Mark “yes” for private institution contracted by the government if the government contracts or makes an agreement with a private entity to procure or distribute medicines for the public sector, e.g. if an agreement is made with a private company to distribute medical items and supplies to public sector district warehouses and health facilities.

Individual health institutions: Yes No DK Yes No DK

3.3 What type of tender process is used for public sector procurement and what is the percentage of the total cost for each:

Percentage of total cost

Competitive tender is a procedure for procuring medicines which puts a number of suppliers into competition. Purchasing is done on the basis of quotations submitted by suppliers in response to a public notice.

National competitive tender:

Competitive tender is a procedure for procuring m

Yes No DK % National competitive tender is open to all or a limited number of local suppliers only.

International competitive tender:

Competitive tender is a procedure for procuring medic

Yes No DK % International competitive tender is open to all or a limited number of local and international suppliers though sometimes conditions give preference to either local or international suppliers.

Negotiation/direct purchasing:

In negotiation/direct purchasing the buyer approaches one or a small

Yes No DK % In negotiation/direct purchasing the buyer approaches one or a small number of suppliers and either buys at the quoted prices or bargains for a specific service arrangement.

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3.6 Is public sector procurement limited to medicines on the Essential Medicines List (EML)?

An Essential Medicines List (EML) is a government

Yes No Don’t Know An Essential Medicines List (EML) is a government-approved selective list of medicines or national reimbursement list. Essential medicines are those that satisfy the priority health care needs of the population. They are selected with due regard to disease prevalence, evidence on efficacy and safety, and comparative cost-effectiveness. Essential medicines are intended to be available within the context of functioning health systems at all times in adequate amounts, in the appropriate dosage forms, with assured quality, and at a price the individual and the community can afford.

4. MEDICINES FINANCING Please consult the budget/ finance division of the health ministry and/or the pharmaceutical supply group in answering the questions in this section. The

hospital/health facility service and/or the national social and insurance services may also need to be consulted.

4.1 What is the total public or government expenditure for medicines in US$ for the most recent year for which data are available?

This question is asking for the total amount the government has spent on

US$ ? Year ? Impossible to determine due to devolved nature of health system.

This question is asking for the total amount the government has spent on medicines, including government allotment, health ministry expenditure, donor contributions channelled through the government, etc.

4.2 Is there a national policy to provide at least some medicines free of charge (i.e. patients do not pay out-of-pocket for medicines) at public primary care facilities?

If medicines are provided for free but patients must pay service fees, mark

Yes No Don’t Know Certain public health vertical programs e.g. TB and indigents (although may depend on Local Government policy and is usually capped)

If medicines are provided for free but patients must pay service fees, mark “yes” here. If some facilities provide medicines for free but there is not a consistent national policy that applies to all primary public health facilities, mark “no” here. If there is a national policy to provide medicines for free at primary public health facilities, but facilities are not required to abide by the policy and not all facilities provide medicines for free, mark “no” here.

b) Which of the following types of patients receive medicines for free:

Patients who cannot afford them: Yes No Don’t Know

Children under 5 years of age: Yes No Don’t Know

Older children:

Mark “yes” if children over 5 years of age receive medi

Yes No Don’t Know Mark “yes” for “older children” if children over 5 years of age receive medicines for free, regardless of the age limit, for example mark “yes” if children under 12 receive medicines for free.

Pregnant women: Yes No Don’t Know

Elderly persons: Yes No Don’t Know

4.3 Which fees are commonly charged in public primary care facilities:

Registration/consultation fees:

Registration and consultation fees are fees patients must pay for seeing a

Yes No Don’t Know Registration and consultation fees are fees patients must pay for seeing a health professional for a health check-up and/or diagnosis regardless of whether or not medicines are prescribed.

Dispensing fees:

A dispensing fee is a fixed fee that pharmacies are allowed to charge per

Yes No Don’t Know A dispensing fee is a fixed fee that pharmacies are allowed to charge per prescribed item or per prescription instead of or in addition to a percentage mark-up. The dispensing fee is paid to the dispenser and is in addition to the cost of the medicine. Both the dispensing fee and the cost of the medicine may be paid in part or whole by the patient, insurer or government.

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Flat fees for medicines:

Mark “yes” if either a flat fee for medicines or a flat f

Yes No Don’t Know Mark “yes” for “flat fees” if either a flat fee for medicines or a flat fee per medicine item is commonly charged. A flat fee for medicines is a fee which remains the same irrespective of the number of medicines or the quantity of each medicine dispensed. Thus, for example, a patient receiving 3 medicines would pay the same as one receiving 1 medicine. Also a patient receiving 20 tablets of one medicine would pay the same as a patient receiving 100 tablets each of 2 medicines. A fee per drug item is a fee where the patient pays one set fee per each medicine irrespective of the number of units (tablets) of that medicine dispensed. Thus, for example, a patient receiving one medicine would pay $1 and a patient receiving 2 medicines would pay $2 and a patient receiving 3 medicines would pay $3 and so on. However, a patient receiving 10 tablets of one medicine would pay the same as a patient receiving 100 tablets of one medicine.

Flat rate co-payments for medicines:

A flat rate co-payment is a fixed amount that a patient must pay either per

Yes No Don’t Know A flat rate co-payment is a fixed amount that a patient must pay either per medicine or per prescription to cover part of the cost of medicines, the other part being paid by an insurer or government.

Percentage co-payments for medicines:

A percentage co-payment is a fixed percentage of the cost of prescribed

Yes No Don’t Know A percentage co-payment is a fixed percentage of the cost of prescribed medicines that a patient must pay to cover part of the cost of medicines, the other part being paid by an insurer or government. The amount a patient pays will depend on the medicine and the number of units of that medicine prescribed.

4.4 Is revenue from fees or the sale of medicines used to pay the salaries or supplement the income of public health personnel in the same facility?

Mark “yes” if any percentage of collected fees or me

Always Frequently Occasionally Never DK

University and cooperative pharmacies; Botika ng Lalawigan

Mark “yes” if any percentage of collected fees or medicines sales is used to pay salaries, expenses and/or in any way supplement the income of public health personnel in the same facility.

4.5 Do prescribers dispense medicines?

In answering this question, mark the degree of frequency doctors or other authorised

Public sector Private sector In answering this question, mark the degree of frequency doctors or other authorised prescribers dispense medicines in the public and private sectors irrespective of laws permitting or disallowing authorised prescribers to dispense medicines.



Vaccines

4.6 What proportion of the population has health insurance?

Health insurance is any prepayment scheme for health care costs

All None

Some DK

All None

Some DK

Health insurance is any prepayment scheme for health care costs additional to but excluding subsidies funded through the health ministry budget. The purpose of questions 4.6 and 4.7 are to identify how much protection the population has against exposure to the cost of medicines at the time people are sick. This includes: Prepaid financing and Public funding through the (prepaid) health ministry budget.

4.7 Are medicines covered by health insurance?

All None

Some DK

All None

Some DK

4.8 Is there a policy covering medicine Public sector Private sector NGO In some countries, NGOs, such as

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prices that applies to the public sector, the private sector, or non-governmental organisations?

In some countries, NGOs, such as faith-based missions, provide non

Yes No DK

Yes No

DK

Yes No

DK

faith-based missions, provide non-profit or not-for-profit health services. The third column should be completed by ticking any policies applicable to this sector. Non-governmental organizations (NGO) are non-governmental non-profit organizations, networks and voluntary associations including charities, community groups, faith-based organizations, professional associations, academia and trade unions.

a) If yes, which of the following policies covering medicine prices apply:

Maximum wholesale mark-up:

A wholesale mark-up is a certain percentage added to a purchasing price

Yes No DK

Yes No DK

Yes No DK

A wholesale mark-up is a certain percentage added to a purchasing price to cover the cost and profit of the wholesaler.

Maximum retail mark-up:

A retail mark-up is a certain percentage added to a purchasing price to

Yes No DK

Yes No DK

Yes No DK

A retail mark-up is a certain percentage added to a purchasing price to cover the cost and profit of the retailer.

Duty on imported raw pharmaceutical materials:

A duty/tax on imported raw pharmaceutical materials is a fee assessed by

Yes No DK

Yes No DK

Yes No DK

A duty/tax on imported raw pharmaceutical materials is a fee assessed by customs or other responsible national authority on imported starting materials, reagents, intermediates, process aids, and solvents intended for use in the production of intermediates or active pharmaceutical ingredients.

Duty on imported finished pharmaceutical products:

A duty/tax on imported finished pharmaceutical products is a fee assessed

Yes No DK

Yes No DK

Yes No DK

A duty/tax on imported finished pharmaceutical products is a fee assessed by customs or other responsible national authority on medicinal products that require no further processing and are already in their final containers.

4.9 Is a national medicine prices monitoring system for retail/patient prices in place?

A national medicine prices monitoring system for retail/patient prices is

Yes No DK

Yes No DK

Yes No DK

A national medicine prices monitoring system for retail/patient prices is any means of regularly tracking and comparing over time retail/patient medicine prices in the public, private and/or NGO sectors.

4.10 Are there regulations mandating retail/patient medicine price information to be made publicly accessible?

In order for retail/patient medicine price information to be considered publicly

Yes No DK

Yes No DK

Yes No DK

In order for retail/patient medicine price information to be considered publicly accessible, one or more of the following or similar measures should be taken: prices should be available on the web or to anyone contacting the responsible authority, prices should be periodically published in national newspapers or official publications, prices should be posted in health facilities/pharmacies, etc.

4.11 Are there official written guidelines on medicine donations that provide rules and regulations for donors and provide guidance to the public, private and/or NGO sectors on accepting and handling donated medicines?

Countries may have differing definitions for medicine donation

Yes No DK

Yes No DK

Yes No DK

Countries may have differing definitions for medicine donations which may include not only products but also monetary gifts earmarked for a particular product from a named source (e.g. manufacturer, organization or other country).

6. RATIONAL USE OF MEDICINES Please consult the health ministry (hospital division), professional bodies and/or the education ministry in answering the questions in this section.

6.1 Is there a national Essential Medicines List (EML)?

A national Essential Medicines List is a government

Yes No Don’t Know A national Essential Medicines List is a government-approved selective list of medicines or national reimbursement list from which most prescriptions should be made. Essential medicines are those that satisfy the priority health care needs of the population. They are selected with due regard to disease prevalence, evidence on efficacy and safety, and comparative cost-effectiveness.

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a) If yes, how many unique medicine formulations does the national EML contain?

Count similar formulations registered or approved as different products as

Number: around 2,000 Count similar formulations registered or approved as different products as one formulation, for example Brand X 500 mg Paracetamol tablets and Brand Y 500 mg Paracetamol tablets are counted as one formulation whereas Brand X 250 mg Paracetamol tablets and Brand X 500 mg Paracetamol tablets are counted as two formulations.

c) When was the national EML last updated? Year: 2008

d) Is the national EML being used in the following:

Mark “yes” if the EML is currently being used.

Mark “yes” if the EML is currently being used.

Public sector procurement: Yes No Don’t Know

Public insurance reimbursement: Yes No Don’t Know

Private insurance reimbursement: Yes No Don’t Know

e) Is there a committee responsible for the selection of products on the national EML?

This refers to a formally recognised committee with members of different

Yes No Don’t Know This refers to a formally recognised committee with members of different expertise and from different agencies/organizations.

6.2 Are the following types of standard treatment guidelines (STG) produced by the health ministry for major conditions?

Mark “yes” if the health ministry or similar national authority produces a

National STG Hospital level

STG

Primary care STG Mark “yes” if the health ministry or similar national authority produces a collection of treatment guidelines covering prevalent/common disease conditions in the country for use at the national, hospital or primary care levels. If treatment guidelines are produced separately for each disease/condition or organ system, mark “no”.

Yes No DK

Yes No DK

Yes No DK

a) If yes, when were the STGs last updated? Year Year Year

6.16 How frequently are the following types of medicines sold over the counter without any prescription:

This question is asking how often antibiotics and injections which require a

This question is asking how often antibiotics and injections which require a prescription to be dispensed are sold without a prescription, regardless of laws prohibiting such practice.

Antibiotics: Always Never

Frequently Occasionally DK

Injections: Always Never

Frequently Occasionally DK

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Supplementary questions for Medicine Prices and Availability Survey Questions Responses Explanations

1. Retail

S1.1 How many licensed private retail medicine outlets are there in the country?

Number 29,994 "Licensed" refers to medicine outlets that are subjected to evaluation against a set of requirements and issued a permit to operate (license).

S1.2 What proportion of patients access medicines through: a) public/government sector b) formal private sector c) Other: specify: d) Other: specify:

a) 10% b) 90%

c) %

d) %

The formal private sector refers to licensed medicine retail outlets and licensed retail drug stores. Common other sectors include non-government organizations, mission health facilities, or dispensing doctors.

S1.3 Are there public medicine outlets which sell medicines in public health facilities?

Yes No Don’t Know

S1.4 Are there private pharmacies which sell medicines in public health facilities?

Yes No Don’t Know

2. Medicines financing

S2.1 What proportion of medicines by volume are imported?

52.3% Year 2007

S2.2 What proportion of medicines by value are imported?

68.6% Year 2007

3. Medicines supply system

S3.1 Are there regulations for local preference in public procurement?

Yes No Don’t Know Local preference purchasing means

that domestic companies will be preferred even if

their prices are not the lowest.

4. Regulatory authority

S4.1 Do the fees charged for the registration of medicines differ between:

a) Originator brands and generic equivalents Yes No Don’t Know

b) Imported and locally produced medicines Yes No Don’t Know

5. Medicine pricing policies

S5.1 Does the government set the price of some/all originator brand products?

Yes No Don’t Know

a) If yes, please describe how this is done (e.g. direct price controls, international reference pricing):

Direct price controls refers to price-setting using a pricing formula, e.g. production costs + a % margin. International reference pricing refers to comparing prices to those in other countries.

S5.2 Does the government set the price of some/all generic products?

Yes No Don’t Know

a) If yes, please describe how this is done (e.g. direct price controls, national reference pricing):

National reference pricing refers to setting prices by comparing the prices of similar medicines (by molecule or therapeutic class; originator brand or generics) on the national market.

S5.3 Are prices set in the private sector for medicines on the national Essential Medicines List?

Yes No No national EML This question is asking whether price-setting is limited to medicines on the national EML.

S5.4 Are prices of medicines set as part of market authorization?

Yes No Don’t Know Marketing authorization is an official document issued by the medicines regulatory authority for the purpose of marketing or free distribution of a product after evaluation for safety, efficacy and quality and/or after registration of a product for marketing.

6. Other

S6.1 Of the medicines included in the survey, are there any which are patent protected or only available as the originator brand product (i.e. single source products)?

Yes No Don’t Know

a) If yes, please specify which medicines: Atorvastatin (Lipitor®)

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S6.2 Please provide the website address (URL) of any websites that publish the following information: a) Pharmaceutical legislation b) Standard treatment guidelines c) Regulatory procedures d) Prescribing information e) Licensed manufacturers f) Medicines approved for marketing g) List of registered products h) Medicine prices (procurement or patient)

a) www.bfad.gov.ph b) c) www.bfad.gov.ph d) e) f) g) www.bfad.gov.ph h)

Public Procurement Prices of Medicines in the Philippines

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